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Investors Facing Risk II: Loss Aversion and Wealth Allocation When Utility Is Derived From Consumption and Narrowly Framed Financial Investments

Rengifo, Erick W.; Trifan, Emanuela - 2007

This paper studies the attitude of non-professional investors towards financial losses and their decisions concerning wealth allocation among consumption, risky, and risk-free financial assets. We employ a two-dimensional utility setting in which both consumption and financial wealth...

Persistent link: https://www.econbiz.de/10010266877

Prospect Theory and Higher Moments

Ågren, Martin - 2006

The paper relates cumulative prospect theory to the moments of returns distributions, e.g. skewness and kurtosis, assuming returns are normal inverse Gaussian distributed. The normal inverse Gaussian distribution parametrizes the first- to forth-order moments, making the investigation...

Persistent link: https://www.econbiz.de/10010321576

Prospect Theory and Stock Returns During Bubbles

Piehler, Maximilian - In: Junior Management Science (JUMS) 5 (2020) 3, pp. 262-294

I test the hypothesis that investors evaluate stocks based on the prospect theory value of the distribution of past returns. Because some investors tilt towards stocks with high prospect theory value, these stocks become overvalued and earn low subsequent returns. During bubbles this effect...

Persistent link: https://www.econbiz.de/10014528971

Individuals' asymmetric choice of order-type depending on the previous returns

Lee, Hyo-jeong - In: Global Business & Finance Review (GBFR) 23 (2018) 2, pp. 1-18

Persistent link: https://www.econbiz.de/10012286654

Prospect theory in the financial decision-making process: An empirical study of two Argentine universities

de Guevara Cortés, Rogelio Ladrón; Tolosa, Leticia Eva; … - In: Journal of Economics, Finance and Administrative Science 28 (2023) 55, pp. 116-133

Purpose - This paper aims to provide empirical evidence for using the prospect theory (PT) basic assumptions in the Argentine context. Mainly, this study analysed the financial decision-making process in students of the economic-administrative academic area of two universities, one public and...

Persistent link: https://www.econbiz.de/10014516356

Einflüsse von kognitiven Verzerrungen auf das Anlageverhalten deutscher Privataktionäre

Hampe, Lena; Rommel, Kai - 2017

only by cognitive biases and social-psychological effects but also by rational behaviour. The subsequent experiment was … this purpose, an experiment with simulated situations of the stock exchange was developed. The subjects of the experiment … the theoretical part and of the experiment can refute an entire rationality of the stock exchange and the investment …

Persistent link: https://www.econbiz.de/10014565194

A Dynamic Model of Investor Decision-Making: How Adaptation to Losses affects Future Selling Decisions

Lee, Carmen; Kraeussl, Roman; Lucas, André; Paas, … - 2008

We conduct an experiment to test whether the size of a loss and the time in a losing position affect investors …

Persistent link: https://www.econbiz.de/10010326067

Prospect Theory and the Law of Small Numbers in the Evaluation of Asset Prices

Luppi, Barbara - 2005

We develop a model of one representative agent and one asset. The agent evaluates the earnings according to Prospect Theory and he does not know exactly the stochastic process generating earnings. While the earnings are generated by a random walk process, the agent considers a Markovian process,...

Persistent link: https://www.econbiz.de/10011651433

The ratio bias phenomenon: fact or artifact?

Lefèbvre, Mathieu; Vieider, Ferdinand M.; Villeval, … - 2009

The ratio bias - according to which individuals prefer to bet on probabilities expressed as a ratio of large numbers to normatively equivalent or superior probabilities expressed as a ratio of small numbers - has recently gained momentum, with researchers especially in health economics...

Persistent link: https://www.econbiz.de/10010277022

Incentive effects on risk attitude in small probability prospects

Lefèbvre, Mathieu; Vieider, Ferdinand M.; Villeval, … - 2009

prospects in a laboratory experiment. Under low stakes, we find the typical risk seeking behavior for small probabilities …

Persistent link: https://www.econbiz.de/10010277023