Cumulative Prospect Theory and Radner Theory: A Critical Assessment from Nigeria
نویسندگان
چکیده
منابع مشابه
Cumulative prospect theory and gambling
Whilst Cumulative Prospect theory (CPT) provides an explanation of gambling on longshots at actuarially unfair odds, it cannot explain why people might bet on more favoured outcomes. This paper shows that this is explicable if the degree of loss aversion experienced by the agent is reduced for small-stake gambles (as a proportion of wealth), and probability distortions are greater over losses t...
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This paper derives conditions under which the standard decomposition of unconditional expected utility into marginal probabilities and conditional expected utilities generalizes to Cumulative Prospect Theory. The results are relevant for empirical analyses in which marginal probabilities are used as explanatory variables.
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It is well-known that if the parties in a legal dispute agree about the likelihood of potential trial outcomes then they will be inclined to settle vs. going to trial in order to reduce litigation costs and risk. In this paper, we assume that both plaintiff and defendant evaluate this decision in accordance with Cumulative Prospect Theory. It is found that the two parties will sometimes be unab...
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Tversky and Kahneman have worked out an appealing model of decision making under uncertainty, involving rankand sign-dependent utilities. This model, cumulative prospect theory (CPT), as well as related models proposed by other authors, has received wide acclaim. Available information and psychological attitude facing ambiguity jointly determine the subjective likelihood values the decision mak...
متن کاملConditioning and Updating under Cumulative Prospect Theory
Under expected utility theory, unconditional expected utility can be decomposed into a weighted sum of conditional expected utilities where the weights are marginal probabilities. We derive necessary and sufficient conditions for a similar decomposition in the framework of Cumulative Prospect Theory (CPT). The conditions also ensure that a decision maker’s conditional preferences (given some ev...
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ژورنال
عنوان ژورنال: Asian Journal of Economics, Business and Accounting
سال: 2020
ISSN: 2456-639X
DOI: 10.9734/ajeba/2020/v20i330326