465758
Description
Mind Map by Douglas Sayers, updated more than 1 year ago
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Created by Douglas Sayers
over 9 years ago
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Prospect Theory (Kahneman &
Tversky)
- Differs from EUT - attitudes to risk not constant
- Mental Accounting
- Framing
- Mental Accounting
- Evaluate gains or losses relative to reference
point
- Loss aversion
- One unit monetary loss more impact on
utility than monetary gain
- One unit monetary loss more impact on
utility than monetary gain
- Risk seeking over losses & risk averse over
gains
- Utility gained/lost from
realisation
- Disposition
effect
- Utility gained/lost from
realisation
- Gains = Concave, Losses =
Convex
- Two Stages
- Editing
- Coding prospects positive or negative, combine identical components, eliminate riskless components, and simplify complex
prospects into more manageable
- Coding prospects positive or negative, combine identical components, eliminate riskless components, and simplify complex
prospects into more manageable
- Evaluation
- Evaluates all outcomes via 'value function' displayed in graph below
- Evaluates all outcomes via 'value function' displayed in graph below
- Editing
Media attachments
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