Prospect Theory
نویسندگان
چکیده
Prospect theory is a descriptive theory of how individuals choose among risky alternatives. The theory challenged the conventional wisdom that economic decision makers are rational expected utility maximizers. We present a number of empirical demonstrations that are inconsistent with the classical theory, expected utility, but can be explained by prospect theory. We then discuss the prospect theory model, including the value function and the probability weighting function. We conclude by highlighting several applications of the theory.
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