Prospect Theory and Decision-Making Phenomena

Kazuhisa Takemura
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Kazuhisa Takemura: Waseda University

Chapter Chapter 9 in Behavioral Decision Theory, 2021, pp 117-129 from Springer

Abstract: Abstract Prospect theory, proposed by Kahneman[aut]Kahneman, D. and Tversky[aut]Tversky, A. (1979) (Tversky and Kahneman, 1992), is[aut]Kahneman, D. a[aut]Tversky, A. theory that combines the knowledge of behavioral decision theoryBehavioral decision theory and nonlinear utility theoryNonlinear utility theory (or generalized expected utility theoryGeneralized expected utility theory). This chapter first reports the predictions derived from the basic assumptions of prospect theoryProspect theory and empirical examples of such predictions. It subsequently provides an overview of a new version of cumulative prospect theoryCumulative prospect theory that explains decision-making not only under riskRisk but also under uncertaintyUncertainty and in light of experimental research into this theory.

Keywords: Utility theory; Nonlinear utility theory; Prospect theory; Loss aversion (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-5453-4_9

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DOI: 10.1007/978-981-16-5453-4_9

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