Expected utility of net present value is the practitioner's approach to incorporate risk aversion into the evaluation of a project's cash flows. The discount rate and the convergence with the risk-neutral beta-adjusted approach from finance have always been a question. To fill this gap, we adopt...

We introduce range and sign dependent utility, an integrative behavioral model for uncertain cash flows. For gambles played today, the model can be seen as an extension of original prospect theory based on range, rather than rank. For single future payouts, the model agrees with hyperbolic...

The traditional decision-analytic approach to incorporate risk aversion into project evaluation is to calculate the expected utility of initial capital plus net present value. The choice of discount rate, and the convergence with the traditional finance approach, have always been a question. Our...