Showing 1 - 10 of 22
This paper reports on the results of an experimental elicitation at the individual level of all prospect theory …, our data suggest that, for gains at least, the subjective treatment of uncertainty in experience-based and description … more pronounced underweighting of moderate and high probabilities for experience-based decisions. On the contrary, for …
Persistent link: https://www.econbiz.de/10010990473
the definition of a unit is altered. For instance, participants holding one piece of chocolate show an endowment effect of … standard size, but so do participants holding one box of chocolates. Yet the box contains about 20 individual pieces of … the property of "unit dependence": the definition of a unit can change, but contingent on any given definition, a …
Persistent link: https://www.econbiz.de/10010990560
. Such gains in knowledge have come primarily via laboratory experiments--a missing piece of the puzzle in many cases is … insights gained from one of the most influential lines of behavioral research--framing manipulations--in an attempt to increase … acutely respond to bonuses posed as losses than as comparable bonuses posed as gains. The magnitude of this framing effect is …
Persistent link: https://www.econbiz.de/10010990610
This paper proposes a quantitative modification of standard utility elicitation procedures, such as the probability and … assumes expected utility not only for the prescriptive purpose of calculating optimal decisions but also for the descriptive … further knowledge of their size or nature, most utility elicitations still calculate utilities by means of the expected …
Persistent link: https://www.econbiz.de/10009218192
threshold, segregation is optimal. This threshold increases with the size of the loss and decreases with the degree of loss … aversion of the decision maker. Our formal analysis results in a set of predictions suggesting that the silver lining effect is …) the decision maker is less loss averse. We test and confirm these predictions in two studies of preferences, both in a …
Persistent link: https://www.econbiz.de/10009203707
We formulate and carry out an analytical treatment of a single-period portfolio choice model featuring a reference …'s cumulative prospect theory (CPT). We introduce a new measure of loss aversion for large payoffs, called the large-loss aversion … degree (LLAD), and show that it is a critical determinant of the well-posedness of the model. The sensitivity of the CPT …
Persistent link: https://www.econbiz.de/10009204006
increasing use of derivatives in managing equity portfolios and the increased use of quantitative techniques for bond portfolio …Downside loss-averse preferences have seen a resurgence in the portfolio management literature. This is due to the … management. We employ the lower partial moment as a risk measure for downside loss aversion and compare mean-variance (M-V) and …
Persistent link: https://www.econbiz.de/10009204163
each experimental point earned, which rules out the competing hypothesis that the retailer rejects contract offers due to …The format of pricing contracts varies substantially across business contexts, a major variable being whether a … contract imposes a fixed fee payment. This paper examines how the use of the fixed fee in pricing contracts affects market …
Persistent link: https://www.econbiz.de/10009204383
circumstances are kept constant. The reversals are of a fundamentally different nature than the reversals found before because they …This paper finds preference reversals in measurements of ambiguity aversion, even if psychological and informational … cannot be explained by context-dependent weightings of attributes. We offer an explanation based on Sugden's random …
Persistent link: https://www.econbiz.de/10009208776
diversification across bonds and stocks for a wide range of evaluation horizons, despite the historically high-risk premium of stocks …This study investigates reference-dependent choice with a stochastic, state-dependent reference point. The optimal … reference-dependent solution equals the optimal consumption solution (no loss aversion) if the reference point is selected fully …
Persistent link: https://www.econbiz.de/10009191352