Prospect Theory for Continuous Distributions Games and Prospects

We extend the original form of Prospect Theory by Kahneman and Tversky from finite lotteries to arbitrary probability distributions, thus paving the way for applications in economics and finance. Moreover, we suggest a method how to incorporate a crucial step of the “editing phase” into Prospect Theory and to remove in this way the discontinuity of the original model.

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Year of publication:	2007-03
Authors:	Rieger, Marc Oliver ; Wang, Mei
Subject:	Prospect Theory \| Cumulative Prospect Theory \| continuity \| probability weighting \| first-order stochastic dominance

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Extent:	application/pdf
Series:	Swiss Finance Institute Research Paper Series.
Type of publication:	Book / Working Paper
Notes:	Number 07-30 21 pages
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005816514