An Alternative to Prospect Theory
نویسندگان
چکیده
This paper presents a new approach to decision-making under risk. Preference over risky prospects is defined as a triadic reference-dependent relation in a sense similar to Sugden (2003). Characterized by a set of von Neumann-Morgenstern-style axioms, a new reference-dependent representation theory – called compound utility theory (CUT) – is obtained which accommodates nonlinear preferences (in probabilities) without invoking the probability-transformation assumption of cumulative prospect theory. Given any opportunity set, a unique reference level can be identified which is consistent with CUT and which enables one to study preferences over both relative changes and absolute levels of wealth simultaneously. c © 2006 Peking University Press
منابع مشابه
An extended hesitant group decision-making technique based on the prospect theory for emergency situations
Throughout the present manuscript, we are going to introduce a novel group emergency decision-making technique in which the application of prospect theory explains the psychological behaviour of the decision maker who is affected by the hesitancy and uncertainty of cognition in decision making problems.\Instead of usual aggregation procedure, we implement here a new fusion technique that ...
متن کاملExtraction and evaluation of gelatin from yellow fin tuna (Thunnus albacares) skin and prospect as an alternative to mammalian gelatin
One of the mainly popular consumed colloid protein materials in pharmaceutics, medical, food and military industries is Gelatin. Especially from warm-water fish gelatin report poss similar characteristics to mammalian’s gelatin .Yellow fin tuna (Thunnus albacares) gelatin skin, lots of waste in form of skin and bones of the fish are produced every day. Analysis factors were extracted alkaline g...
متن کاملNewsvendor Models with Alternative Risk Preferences within Expected Utility Theory and Prospect Theory Frameworks
Newsvendor models are widely used in the literature, and usually based upon the assumption of risk neutrality. Recently there is a growing body of literature that attempts to use alternative risk preferences rather than risk neutrality to describe the newsvendor decision-making behavior. In this chapter, we provide an overview of newsvendor models with alternative risk preferences within the ex...
متن کاملProspect relativity: how choice options influence decision under risk.
In many theories of decision under risk (e.g., expected utility theory, rank-dependent utility theory, and prospect theory), the utility of a prospect is independent of other options in the choice set. The experiments presented here show a large effect of the available options, suggesting instead that prospects are valued relative to one another. The judged certainty equivalent for a prospect i...
متن کاملDynamic Assessment in Iranian EFL Classrooms: A Post- method Enquiry
Derived from the emerging paradigm shift in English language teaching and assessment, there has been a renewal of interest in dynamic assessment (DA) to be used as an alternative to the traditional static testing in language classrooms. However, to date, DA practice has been mostly limited to clinical treatments of children with learning disabilities, and it has not been widely incorporated int...
متن کاملExplaining Heterogeneity in Risk Preferences Using a Finite Mixture Model
This paper studies the effect of the space (distance) between lotteries' outcomes on risk-taking behavior and the shape of estimated utility and probability weighting functions. Previously investigated experimental data shows a significant space effect in the gain domain. As compared to low spaced lotteries, high spaced lotteries are associated with higher risk aversion for high probabilities o...
متن کامل