Prospect Theory (Kahneman & Tversky)

Differs from EUT - attitudes to risk not constant
1. Mental Accounting
2. Framing
Evaluate gains or losses relative to reference point
Loss aversion
1. One unit monetary loss more impact on utility than monetary gain
Risk seeking over losses & risk averse over gains
1. Utility gained/lost from realisation
2. Disposition effect
Gains = Concave, Losses = Convex
Two Stages
1. Editing
  1. Coding prospects positive or negative, combine identical components, eliminate riskless components, and simplify complex prospects into more manageable
2. Evaluation
  1. Evaluates all outcomes via 'value function' displayed in graph below

Resumen del Recurso

	Creado por Douglas Sayers hace casi 13 años