Dhami, Sanjit; al-Nowaihi, Ali - Department of Economics, Leicester University - 2008
Two of the anomalies of the exponentially discounted utility model are the 'magnitude effect' (larger magnitudes are … discounted less) and the 'sign effect' (a loss is discounted less than a gain of the same magnitude). The literature has followed … Loewenstein and Prelec (1992) in attributing the magnitude effect to the increasing elasticity of the value function and the sign …