SP/A and CPT: A reconciliation of two behavioral decision theories

We show that security-potential-aspiration theory (SP/A) and cumulative prospect theory (CPT), although based on very different psychological principles are mathematically very similar when studied in the appropriate framework. This helps to interpret results on portfolio optimization under behavioral preferences.

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Year of publication:	2010
Authors:	Rieger, Marc Oliver
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 108.2010, 3, p. 327-329
Publisher:	Elsevier
Keywords:	Decision theory Aspiration level Cumulative prospect theory Behavioral portfolio optimization

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008866996