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
Authors:	Schmidt, Ulrich ; Zank, Horst
Publisher:	Kiel : Kiel Institute for the World Economy (IfW)
Subject:	Prospect theory \| reference point \| diminishing sensitivity \| loss aversion

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Series:	Kiel Working Paper ; 1611
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	623170108 [GVK] hdl:10419/30262 [Handle] RePEc:zbw:ifwkwp:1611 [RePEc]
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	EconStor

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