Conditioning and updating under cumulative prospect theory

This paper derives conditions under which the well-known decomposition of unconditional expected utility into marginal probabilities and conditional expected utility generalizes to Cumulative Prospect Theory, as well as updating rules for probability weighting functions. The results are, for example, of interest for empirical and experimental work, when available choice data is for situations where payoffs given the conditioning events are random.

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Year of publication:	2009
Authors:	Stomper, Alex ; Vierø, Marie-Louise
Publisher:	Kingston (Ontario) : Queen's University, Department of Economics
Subject:	Prospect Theory \| Wahrscheinlichkeitsrechnung \| Mathematische Ökonomie \| Probability Weighting Functions \| Cumulative Prospect Theory \| Conditioning \| Updating

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Series:	Queen's Economics Department Working Paper ; 1228
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	623444399 [GVK] hdl:10419/67776 [Handle]
Source:	EconStor

Persistent link: https://www.econbiz.de/10010290361