Reference-Dependent Risk Attitudes
نویسندگان
چکیده
Daniel Kahneman and Amos Tversky’s (1979) prospect theory, and the literature building from it, provide theories of risk attitudes based on a few regularities. Most importantly, evaluation of an outcome is influenced by how it compares to a reference point, with people exhibiting both a significantly greater aversion to losses than appreciation of gains, and a diminishing sensitivity to changes in an outcome as it moves farther from the reference point. In addition, people weight the probability of a prospect nonlinearly, overweighting small probabilities and underweighting high probabilities. The implications of prospect theory have been studied with several different specifications of the reference point, including the status quo, lagged status quo, and the mean of the chosen lottery. These various approaches explain many risk attitudes that are inconsistent with the classical diminishing-marginal-utility-of-wealth Reference-Dependent Risk Attitudes
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Reference-Dependent Risk Attitudes
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