Is Probability Weighting Sensitive to the Magnitude of Consequences? An Experimental Investigation on Losses

B-Tier
Journal: Journal of Risk and Uncertainty
Year: 2004
Volume: 28
Issue: 3
Pages: 217-235

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

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

Abstract

Experimental investigations of the probability weighting function over losses are scarce and all involve small payoffs. The paper aims to give new insight into the probability weighting function for losses, by eliciting it through a simple two-stage semi-parametric procedure over more realistic losses, and by investigating its sensitivity to the magnitude of the payoffs. Current data confirm previous evidence of convex utility functions and inverse-S-shaped weighting functions. Still, at least for small probabilities, probability weighting appears to be affected by the size of consequences: the larger the losses, the more aversive the gambles and the more pessimistic the subjects are.

Technical Details

RePEc Handle
repec:kap:jrisku:v:28:y:2004:i:3:p:217-235
Journal Field
Theory
Author Count
1
Added to Database
2026-01-25