The PD-Utility Function for Prospect Behavior and Related Researches

Feng Dai (), Songtao Wu and Yajun Zuang
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Songtao Wu: Zhengzhou Information Engineering University
Yajun Zuang: Zhengzhou Information Engineering University

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Abstract: Based on Partial Distribution [11],[12], we put forward a PD-utility function of prospect behavior for the first time, the profiting utility function and losing utility function. The PD-utility function can reflect sufficiently the human¡¯s risk preferences properties to profiting or losing, describe and bring to light availably the important relations between profiting utility and losing utility, and interpret many conclusions in Daniel Kahneman¡¯s prospect theory in analytic way. Also we present the concepts and analytic expressions of essential indexes of realized level for prospect behavior, the limit value, the balanced value, and focus value, especially the method of calculating them. The limit level is beneficial to judge the reversal position of reality movement trend, and the latter is beneficial to judge that the focus of current reality is reasonableness or not. And we give out the calculating formula for the optimal value of realized level for prospect with its appearing probability.

Keywords: partial distribution; PD-utility function; prospect behavior; essential indexes; optimal value (search for similar items in EconPapers)
JEL-codes: P (search for similar items in EconPapers)
Pages: 10 pages
Date: 2004-03-24
Note: Type of Document - pdf; pages: 10
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpot:0403003

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