Harin, Alexander
(2014):
*Problems of utility and prospect theories. A discontinuity of Prelec’s function.*

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## Abstract

A possibility of the existence of a discontinuity of Prelec’s (probability weighting) function W(p) at the probability p = 1 is discussed. This possibility is supported by the Aczél–Luce question whether Prelec’s weighting function W(p) is equal to 1 at p = 1, by the purely mathematical restrictions and the “certain–uncertain” inconsistency of the random–lottery incentive experiments. The results of the well-known experiments support this possibility as well.

Item Type: | MPRA Paper |
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Original Title: | Problems of utility and prospect theories. A discontinuity of Prelec’s function |

Language: | English |

Keywords: | utility; prospect theory; certainty effect; experiment; Prelec; probability weighting function; |

Subjects: | C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General C - Mathematical and Quantitative Methods > C9 - Design of Experiments C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior D - Microeconomics > D8 - Information, Knowledge, and Uncertainty D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty |

Item ID: | 61027 |

Depositing User: | Alexander Harin |

Date Deposited: | 31 Dec 2014 00:13 |

Last Modified: | 01 Oct 2019 05:15 |

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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/61027 |