Specific Applications of Prospect Theory to Behavioral Finance

James Ming Chen
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James Ming Chen: Michigan State University

Chapter Chapter 9 in Finance and the Behavioral Prospect, 2016, pp 213-246 from Palgrave Macmillan

Abstract: Abstract Prospect theory illuminates multiple problems in behavioral finance. In economics generally and in finance in particular, the real challenge lies in “know[ing] exactly how to apply” prospect theory’s “many remarkable insights.”1 “Whatever its limitations, prospect theory represents a valuable refinement to the maximization assumption” of rational choice and expected utility theory, and accordingly “should inform … policymaking.”2

Keywords: Asset Price; Supra Note; Initial Public Offering; Prospect Theory; Private Equity (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:pal:qpochp:978-3-319-32711-2_9

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DOI: 10.1007/978-3-319-32711-2_9

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