- A-Z
- Jena Economics Rese...
- Volume 4
- Understanding the T...
- Autor(in)
- Erschienen
- 23. August 2010
- Nummer des Discussion-Papers
-
2010-053
- Schlagwort(e)
-
cumulative prospect theory
experimental study
risk attitudes
- Zusammenfsg.
-
Cumulative Prospect Theory (PT) introduced the weighting of probabilities as an additional component to capture risk attitudes. However, this addition would be a less significant challenge to expected utility theory (EU) if utility curvature and probability weighting showed strong positive correlation. In that case the utility curvature in EU alone, while not properly describing risky behavior in general, would still capture most of the variance of individual risk aversion. This study provides experimental evidence that such a strong and positive correlation does not exist. Although most individuals exhibit concave utility and convex probability weighting, the two components show no strong positive correlation.
- article pub. typess JER
- Research article
- article languages JER
- Englisch
- JEL-Classification for JER
- C91 - Laboratory, Individual Behavior ; D81 - Criteria for Decision-Making under Risk and Uncertainty
- URN
- urn:nbn:de:urmel-9a397b6a-1522-4c4d-947b-ba4f495206b68-00195003-12