Endogenizing Prospect Theory's Reference Point

In previous models of (cumulative) prospect theory reference-dependence of preferences is imposed beforehand and the location of the reference point is exogenously determined. This note provides a foundation of prospect theory, where reference-dependence is derived from preference conditions and a unique reference point arises endogenously

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Year of publication:	2010-03
Authors:	Schmidt, Ulrich ; Zank, Horst
Institutions:	Institut für Weltwirtschaft (IfW)
Subject:	Prospect theory \| reference point \| diminishing sensitivity \| loss aversion

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Extent:	application/pdf
Series:	Kiel Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	16 pages
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008631615