In rational choice theory, individuals are assumed always to choose the option that will provide them maximum utility. But actual choices must be based on subjective perceptions of the attributes of the available options, and the accuracy of these perceptions will always be limited by the information-processing capacity of one’s nervous system. In recent work (Woodford 2011), I propose a theory...

We integrate the predictions of prospect theory, the threat-rigidity hypothesis, and institutional theory to suggest how patterns of institutional persistence and change depend on whether decision makers view environmental shifts as potential opportunities for or threats to gaining legitimacy. We argue that in the event that decision makers face ambiguity in their reading of the environment, th...

In their famous work on prospect theory Kahneman and Tversky have presented a couple of examples where human decision making deviates from rational decision making as defined by decision theory. This paper describes the use of extended behavior networks to model human decision making in the sense of prospect theory. We show that the experimental findings of non-rational decision making describe...

one of the most important questions in epistemology is the nonphysical realities, like phenomenal consciousness. the main claim of physicalism is real explanations of events and properties are only physical explanations and representationalists are agree too. thus these realities can explained by the rule of biases of physical and objective events.on the other hand , phenomenalists maintain tha...

Prospect theory, first described in a 1979 paper by Daniel Kahneman and Amos Tversky, is widely viewed as the best available description of how people evaluate risk in experimental settings. While the theory contains many remarkable insights, it has proven challenging to apply these insights in economic settings, and it is only recently that there has been real progress in doing so. In this pap...

Prospect theory scholars have identified important human decision-making biases, but they have been conspicuously silent on the question of the origin of these biases. Here we create a model that shows preferences consistent with prospect theory may have an origin in evolutionary psychology. Specifically, we derive a model from risk-sensitive optimal foraging theory to generate an explanation f...

Traditional accounts of decision-making under uncertainty have taken the Von Neumann and Morgenstern approach of Expected Utility Theory that considers how decisions under uncertainty should be made. This prescriptive model states that, when faced with a choice, a rational decision maker will pick the prospect that offers the highest expected utility. But as has been demonstrated by Kahnemann a...

Title of dissertation: STOCHASTIC SYSTEMS WITH CUMULATIVE PROSPECT THEORY Kun Lin, Doctor of Philosophy, 2013 Dissertation directed by: Professor Steven I. Marcus Department of Electrical & Computer Engineering Stochastic control problems arise in many fields. Traditionally, the most widely used class of performance criteria in stochastic control problems is riskneutral. More recent attempts at...

This paper tests a novel implication of the original version of prospect theory (Kahneman and Tversky, 1979): that choices may systematically violate transitivity. Some have interpreted this implication as a weakness, viewing it as an anomaly generated by the ‘editing phase’ of prospect theory which can be rendered redundant by an appropriate re-specification of the preference function. Althoug...