Too risk averse for Prospect Theory?

We observe that the standard variant of Prospect Theory cannot describe very risk-averse choices in simple lotteries. This makes it diffcult to accommodate it with experimental data. Using an exponential value function can solve this problem and allows to cover the whole spectrum of risk-averse behavior.

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Year of publication:	2007-06-21
Authors:	Rieger, Marc Oliver
Institutions:	Institut für Schweizerisches Bankwesen <Zürich>
Subject:	Wahrscheinlichkeitsverteilung \| Risikoaversion \| Erwartungstheorie

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Extent:	113664 bytes 11 p. application/pdf
Series:	Institut für Schweizerisches Bankwesen Zürich - Research Paper Series Research Paper ; Jun (2007) FINRISK Working Paper ; 384 (2007)
Type of publication:	Book / Working Paper
Language:	English
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty ; Forecast, decision making ; Game and Bargaining Theory. General Resources ; Individual Working Papers, Preprints ; No country specification
Source:	USB Cologne (business full texts)

Persistent link: https://www.econbiz.de/10005858200