Problems of utility and prospect theories. A “certain–uncertain” inconsistency within their experimental methods
Alexander Harin ()
MPRA Paper from University Library of Munich, Germany
In random–lottery incentive experiments, the choices of certain outcomes are stimulated by uncertain lotteries. This “certain–uncertain” inconsistency is evident, but only recently emphasized. Because of it, conclusions from a random–lottery incentive experiment that includes a certain outcome cannot be unquestionably correct. Well-known experimental results and purely mathematical theorems support this. The main result presented here is: The usual experimental systems of utility and prospect theories may need additional independent analyses in the context of the “certain–uncertain” inconsistency.
Keywords: utility; prospect theory; experiment; incentive; random-lottery incentive system; Prelec; probability weighting function (search for similar items in EconPapers)
JEL-codes: C1 C9 C90 C91 C93 D8 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-exp, nep-hpe and nep-upt
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