Is data interpretation in utility and prospect theories unquestionably correct?

Harin, Alexander (2014): Is data interpretation in utility and prospect theories unquestionably correct?

Abstract

This is a very draft version of the report "The random-lottery incentive system. Can p~1 experiments deductions be correct?". It is published to extend the abstract of the report. Aczél and Luce emphasized a fundamental question: whether W(1)=1 (whether the Prelec weighting function equals 1 at p=1). A purely mathematical theorem proves W(1)<1. Because of this evident "certain-uncertain" inconsistency, the deductions from the random-lottery incentive experiments, those include the certain outcomes, cannot be unquestionably correct.

• Item Type: MPRA Paper
• Language: English
• Keywords: utility; prospect theory; random-lottery incentive system; Prelec weighting function; experiments
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General; C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology ; Computer Programs > C81 - Methodology for Collecting, Estimating, and Organizing Microeconomic Data ; Data Access; 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 > D81 - Criteria for Decision-Making under Risk and Uncertainty

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