Prospect theory predicts that loss averse agents who fear they will not reach their reference utility level are more apt to adopt risky strategies to avoid that painful possibility compared to agents who are more sure of their relative standing. This paper tests this theory with data from...

The main aim of this paper is to empirically evaluate the role of three significant factors of the Prospect Theory: the S-shaped value function, the loss aversion, and the distortion of probability, in decision making. In order to do this, a general behavioral reward-risk model is firstly setup...