A value function that explains the magnitude and sign effects

Ali al-Nowaihi () and Sanjit Dhami

Economics Letters, 2009, vol. 105, issue 3, 224-229

Abstract: Loewenstein and Prelec (1992) explain the 'magnitude effect' and the 'sign effect', respectively, by using increasing elasticity of the value function and a higher elasticity for losses as compared to gains. We provide a value function with these two properties.

Keywords: Anomalies; of; the; exponentially; discounted; utility; model; The; magnitude; effect; The; sign; effect; SIE; value; functions (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:105:y:2009:i:3:p:224-229

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