# Advances in Prospect Theory: Cumulative Representation of Uncertainty

*Amos Tversky* and
*Daniel Kahneman*

*Journal of Risk and Uncertainty*, 1992, vol. 5, issue 4, 297-323

**Abstract:**
We develop a new version of prospect theory that employs cumulative rather than separable decision weights and extends the theory in several respects. This version, called cumulative prospect theory, applies to uncertain as well as to risky prospects with any number of outcomes, and it allows different weighting functions for gains and for losses. Two principles, diminishing sensitivity and loss aversion, are invoked to explain the characteristic curvature of the value function and the weighting functions. A review of the experimental evidence and the results of a new experiment confirm a distinctive fourfold pattern of risk: risk aversion for gains and risk seeking for losses of high probability; risk seeking for gains and risk aversion for losses of low probability. Copyright 1992 by Kluwer Academic Publishers

**Date:** 1992

**References:** Add references at CitEc

**Citations** View citations in EconPapers (1893) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

**Related works:**

This item may be available elsewhere in EconPapers: Search for items with the same title.

**Export reference:** BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text

**Persistent link:** https://EconPapers.repec.org/RePEc:kap:jrisku:v:5:y:1992:i:4:p:297-323

**Ordering information:** This journal article can be ordered from

http://www.springer. ... ry/journal/11166/PS2

Access Statistics for this article

Journal of Risk and Uncertainty is currently edited by *W. Kip Viscusi*

More articles in Journal of Risk and Uncertainty from Springer

Series data maintained by Sonal Shukla ().