Is Prelec’s function discontinuous at p = 1? (for the Einhorn Award of SJDM)
MPRA Paper from University Library of Munich, Germany
A possibility of the existence of a discontinuity of Prelec’s (probability weighting) function at the probability p = 1 is discussed. This possibility is supported by the purely mathematical theorems and the “certain–uncertain” inconsistency of the random–lottery incentive experiments. The results of the well-known experiment support it as well.
Keywords: Prelec; utility; prospect theory; probability weighting function; Luce (search for similar items in EconPapers)
JEL-codes: C0 C02 C1 C8 C9 C91 C93 D01 D8 D81 G02 G11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-upt
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