DEPARTMENT OF ECONOMICS A SIMPLE DERIVATION OF PRELEC’S PROBABILITY WEIGHTING FUNCTION …/20 July 2005 A simple derivation of Prelec’s probability weighting function Ali al-Nowaihi ∗ Sanjit Dhami † June 2005 … derivation of Prelec’s function is given, achieving a further simplification. Keywords: Decision making under risk, Prelec’s …

making under risk; Prelec’s probability weighting function; Higher order Prelec probability weighting functions; Behavioral …-underweights infinitesimal probabilities,if(a)lim p→0 w(p) p =0and (b) lim p→1 1−w(p) 1−p =0. 3 3. Prelec’s probability weighting function The ….5) is satisfied. By Proposition 6(b), for Prelec’s probability weighting function (Definition 4), for the value function (6 …