A Revealed Reference Point for Prospect Theory
| Autor: | Horst Zank, Katarzyna Werner |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2018 |
| Předmět: |
Economics and Econometrics
Property (philosophy) Sign-dependence Computer science 05 social sciences Empirical measure Reference point Probability midpoint Consistency (negotiation) Prospect theory Revealed preference 0502 economics and business A priori and a posteriori 050206 economic theory 050207 economics Preference (economics) Mathematical economics Axiom Rank-dependence |
| Zdroj: | Werner, K M & Zank, H 2018, ' A Revealed Reference Point for Prospect Theory ', Economic Theory, vol. 67, pp. 1-43 . https://doi.org/10.1007/s00199-017-1096-2 |
| DOI: | 10.1007/s00199-017-1096-2 |
| Popis: | Without an instrument to identify the reference point, prospect theory includes a degree of freedom that makes the model difficult to falsify. To address this issue, we propose a foundation for prospect theory that advances existing approaches with three innovations. First, the reference point is not known a priori; if preferences are reference-dependent, the reference point is revealed from behavior. Second, the key preference axiom is formulated as a consistency property for attitudes toward probabilities; it entails both a revealed preference test for reference-dependence and a tool suitable for empirical measurement. Third, minimal assumptions are imposed for outcomes, thereby extending the model to general settings. By incorporating these three features we deliver general foundations for prospect theory that show how reference points can be identified and how the model can be falsified. |
| Databáze: | OpenAIRE |
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