Stochastic Dominance and Prospect Dominance with Subjective Weighting Functions.

B-Tier
Journal: Journal of Risk and Uncertainty
Year: 1998
Volume: 16
Issue: 2
Pages: 147-63

Authors (2)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Laboratory experiments with and without real money repeatedly reveal that even if all subjects observe the same pair of cumulative distributions F and G, they act as if they were other cumulative probability functions F* and G* different for different investors. Namely, the subjects assign (subjective) weights to the various probabilities. In their breakthrough article Kahneman and Tversky (1979) suggest that in making decisions under uncertainty, the subjects apply a monotonic transformation pi(p) where p are the probabilities, and investors make decisions by comparing pi(p) corresponding to the two distributions under consideration rather than by comparing the true probabilities, p, themselves. Copyright 1998 by Kluwer Academic Publishers

Technical Details

RePEc Handle
repec:kap:jrisku:v:16:y:1998:i:2:p:147-63
Journal Field
Theory
Author Count
2
Added to Database
2026-01-29