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Problems of utility and prospect theories. A “certain–uncertain” inconsistency within their experimental methods

Harin, Alexander (2015): Problems of utility and prospect theories. A “certain–uncertain” inconsistency within their experimental methods.

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Abstract

In random–lottery incentive experiments, the choices of certain outcomes are stimulated by uncertain lotteries. This “certain–uncertain” inconsistency is evident, but only recently emphasized. Because of it, conclusions from a random–lottery incentive experiment that includes a certain outcome cannot be unquestionably correct. Well-known experimental results and purely mathematical theorems support this. The main result presented here is: The usual experimental systems of utility and prospect theories may need additional independent analyses in the context of the “certain–uncertain” inconsistency.

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