When one prospect is certain and the other uncertain, Cumulative Prospect Theory employs the certainty equivalent methodology to estimate Decision Weights (DW). However, DW may be different with two uncertain prospects. In this study, we neutralize the "certainty effect" and propose Stochastic...

We derive a discrete Log-Normal Asset Pricing Model (LAPM) based on log-normal distributed risky asset returns. Providing an analytical description of the efficient frontier in E(Log(R))-STD(Log(R)) space, we than show that under the log-normality of returns' assumption a segmented market...

In 23 out of 26 US industries, the annual CEO bonus is larger than the annual salary, suggesting that the bonus strongly affects the CEO's decisions. As the high leverage of financial institutions is often blamed for the 2008 financial crises, in this study we focus on leverage as a factor...