Is Cumulative Prospect Theory a Serious Alternative for the Expected Utility Paradigm?

The purpose of this paper is to demonstrate that Cumulative Prospect Theory is a serious alternative for Expected Utility Theory. It does not contradict Expected Utility, but includes it as a special example. A very useful example, because simple and yet very flexible, Expected Utility proved indispensable in many areas of economic analysis. Though a special example, because it does not capture some important effects observed in real choice behavior.

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Year of publication:	2006-11-14
Authors:	Lewandowski, Michal
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	Cumulative Prospect Theory \| CPT \| Expected Utility Theory \| prospect stochastic dominance

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	D03 - Behavioral Economics; Underlying Principles ; D81 - Criteria for Decision-Making under Risk and Uncertainty ; C91 - Laboratory, Individual Behavior
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011110405