This paper proposes and evaluates an evolutionary multiobjective optimization algorithm (EMOA) that uses a new quality indicator, called the prospect indicator, for parent selection and environmental selection operators. The prospect indicator measures the potential of each individual to reproduce offspring that dominate itself and spread out in the objective space. The prospect indicator allow...

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 th...

Tax evasion analysis is typically based on an expected utility theory (EUT) framework. However, this leads to several qualitative and quantitative puzzles. Given actual probabilities of audit and penalty rates the return on evasion ranges from 91-98 percent. So why don’t most of us evade? Furthermore, an EUT based analysis predicts that we should evade less as the tax rate increases (Yitzhaki p...

Prospect theory (Kahneman & Tversky, 1979) predictions were examined in light of ethnocentrism and intergroup conflict. An experiment conducted at the outset of the 2003 invasion of Iraq by the U.S., U. K. and their allies explored American and British participants’ preferences for certain versus uncertain gains and losses concerning Iraqi, American, and British lives. In four conditions, parti...

In many theories of decision under risk (e.g., expected utility theory, rank dependent utility theory, and prospect theory) the utility or value of a prospect is independent of other prospects or options in the choice set. The experiments presented here show a large effect of the available options set, suggesting instead that prospects are valued relative to one another. The judged certainty eq...

This paper discusses di€erences between prospect theory and cumulative prospect theory. It shows that cumulative prospect theory is not merely a formal correction of some theoretical problems in prospect theory, but it also gives di€erent predictions. Some experiments by Lola Lopes are re-analyzed, and are demonstrated to favor cumulative prospect theory over prospect theory. It turns out that ...