We examined prospect theory and reference point adaptation following gains or losses using participants from China, Korea, and the US. Supporting prospect theory, we found in Studies 1 and 2 that subjects from all three countries generally exhibited loss aversion and a greater propensity for...

The results in this paper are relevant for the application of valuation studies in cost-benefit analysis in the presence of the willingness to pay - willingness to accept gap. We consider a consumer who makes choices based on choice preferences exhibiting reference-dependence and loss aversion....

This paper suggests a behavioral, preference-based definition of loss aversion for decision under risk. This definition is based on the initial intuition of Markowitz [30] and Kahneman and Tversky [19] that most individuals dislike symmetric bets, and that the aversion to such bets increases...

It is well-known that expected utility (EU) has empirical deficiencies. Prospect theory (PT) has developed as an alternative with more descriptive validity. However, PT’s full function had not yet been quantified in the health domain. This paper is the first to simultaneously measure utility...

This short paper is devoted to two items: 1) An analysis of Prelec’s weighting function at the probability p = 1 is highlighted (this analysis was performed by R. Duncan Luce in two articles with Ragnar Steingrimsson and János Aczél and here is referred to as the “Luce problem”). 2) The...

In today’s insurance market there is a void that is any one person can have several insurance policies, this entails different providers, different payment schemes etc. There is an opportunity for an insurance company to unite all policies and create a universal insurance (UI) policy, an all...

This paper presents a regression procedure for inhomogeneous data characterized by varying variance, skewness and kurtosis or by an unequal amount of data over the estimation domain. The concept is based first on the estimation of the densities of an observed variable for given values of...

Cumulative Prospect Theory (Kahneman, Tversky, 1979, 1992) holds that the value function is described using a power function, and is concave for gains and convex for losses. These postulates are questioned on the basis of recently reported experiments, paradoxes (gain-loss separability...

This paper presents a review of adaptation concepts at the evolutionary, environmental, neural, sensory, mental and mathematical levels, including Helson’s and Parducci’s theories of perception and category judgments. Two kinds of adaptation can be clearly distinguished. The first, known as...

For many decades over the 20th Century, the mainstream of economics adopted a normative and axiomatic theory of individual behavior in which maximizing procedures were carried out by rationally unbounded agents. This status has been challenged on many grounds and alternative views from fields...