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352
Advances in Prospect Theory: Cumulative Representation of Uncertainty
 JOURNAL OF RISK AND UNCERTAINTY, 5:297323 (1992)
, 1992
"... We develop a new version of prospect theory that employs cumulative rather than separable decision weights and extends the theory in several respects. This version, called cumulative prospect theory, applies to uncertain as well as to risky prospects with any number of outcomes, and it allows differ ..."
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Cited by 888 (9 self)
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We develop a new version of prospect theory that employs cumulative rather than separable decision weights and extends the theory in several respects. This version, called cumulative prospect theory, applies to uncertain as well as to risky prospects with any number of outcomes, and it allows different weighting functions for gains and for losses. Two principles, diminishing sensitivity and loss aversion, are invoked to explain the characteristic curvature of the value function and the weighting functions. A review of the experimental evidence and the results of a new experiment confirm a distinctive fourfold pattern of risk attitudes: risk aversion for gains and risk seeking for losses of high probability; risk seeking for gains and risk aversion for losses of low probability.
Subjective probability and expected utility without additivity
 Econometrica
, 1989
"... Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at ..."
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Cited by 567 (10 self)
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Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at
Psychological Expected Utility Theory and Anticipatory Feelings
 Center, New York University
, 1997
"... We extend expected utility theory to situations in which agents experience feelings of anticipation prior to the resolution of uncertainty. We show how these anticipatory feelings may result in time inconsistency. We provide an example from portfolio theory to illustrate the potential impact of anti ..."
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Cited by 126 (4 self)
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We extend expected utility theory to situations in which agents experience feelings of anticipation prior to the resolution of uncertainty. We show how these anticipatory feelings may result in time inconsistency. We provide an example from portfolio theory to illustrate the potential impact of anticipation on asset prices. I.
The Role of Aspiration Level in Risky Choice: A Comparison of Cumulative Prospect Theory and SP/A Theory
 Journal of Mathematical Psychology
, 1999
"... In recent years, descriptive models of risky choice have incorporated features that reflect the importance of particular outcome values in choice. Cumulative prospect theory (CPT) does this by inserting a reference point in the utility function. SP/A (securitypotential/aspiration) theory uses aspir ..."
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Cited by 52 (0 self)
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In recent years, descriptive models of risky choice have incorporated features that reflect the importance of particular outcome values in choice. Cumulative prospect theory (CPT) does this by inserting a reference point in the utility function. SP/A (securitypotential/aspiration) theory uses aspiration level as a second criterion in the choice process. Experiment 1 compares the ability of the CPT and SP/A models to account for the same withinsubjects data set and finds in favor of SP/A. Experiment 2 replicates the main finding of Experiment 1 in a betweensubjects design. The final discussion brackets the SP/A result by showing the impact on fit of both decreasing and increasing the number of free
The Priority Heuristic: Making Choices without TradeOffs
 Psychological Review
, 2006
"... Bernoulli’s framework of expected utility serves as a model for various psychological processes, including motivation, moral sense, attitudes, and decision making. To account for evidence at variance with expected utility, the authors generalize the framework of fast and frugal heuristics from infer ..."
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Cited by 47 (8 self)
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Bernoulli’s framework of expected utility serves as a model for various psychological processes, including motivation, moral sense, attitudes, and decision making. To account for evidence at variance with expected utility, the authors generalize the framework of fast and frugal heuristics from inferences to preferences. The priority heuristic predicts (a) the Allais paradox, (b) risk aversion for gains if probabilities are high, (c) risk seeking for gains if probabilities are low (e.g., lottery tickets), (d) risk aversion for losses if probabilities are low (e.g., buying insurance), (e) risk seeking for losses if probabilities are high, (f) the certainty effect, (g) the possibility effect, and (h) intransitivities. The authors test how accurately the heuristic predicts people’s choices, compared with previously proposed heuristics and 3 modifications of expected utility theory: securitypotential/aspiration theory, transferofattentionexchange model, and cumulative prospect theory.
Utility measurement: Configuralweight theory and the judge's point of view
 Journal of Experimental Psychology: Human Perception and Performance
, 1992
"... Subjects judged the values of lotteries from 3 points of view: the highest price that a buyer should pay, the lowest price that a seller should accept, and the "fair " price. The rank order of judgments changed as a function of point of view. Data also showed violations of branch independe ..."
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Cited by 35 (14 self)
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Subjects judged the values of lotteries from 3 points of view: the highest price that a buyer should pay, the lowest price that a seller should accept, and the "fair " price. The rank order of judgments changed as a function of point of view. Data also showed violations of branch independence and monotonicity (dominance). These findings pose difficulties for nonconfigural theories of decision making, such as subjective expected utility theory, but can be described by configuralweight theory. Configural weighting is similar to rankdependent utility theory, except that the weight of the lowest outcome in a gamble depends on the viewpoint, and 0valued outcomes receive differential weighting. Configuralweight theory predicted the effect of viewpoint, the violations of branch independence, and the violations of monotonicity, using a single scale of utility that is independent of the lottery and the point of view. In order to study how people evaluate and choose among alternatives, experimental psychologists have investigated judgments of lotteries. With lotteries, one can manipulate what appear to be crucial ingredients in judgment and decision making: the alternatives, the outcomes, and probabilities of the outcomes. Gambles therefore seem to provide a fruitful paradigm for the investigation of decisions (Edwards, 1954;
From subjective probabilities to decision weights: The effect of asymmetric loss functions on the evaluation of uncertain outcomes and events
 Psychological Bulletin(115
, 1994
"... Much of decision aiding uses a divideandconquer strategy to help people with risky decisions. Assessing the utility of outcomes and one's degree of belief in their likelihood are assumed to be separable tasks, the results of which can then be combined to determine the preferred alternative. E ..."
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Cited by 34 (2 self)
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Much of decision aiding uses a divideandconquer strategy to help people with risky decisions. Assessing the utility of outcomes and one's degree of belief in their likelihood are assumed to be separable tasks, the results of which can then be combined to determine the preferred alternative. Evidence from different areas of psychology now provides a growing consensus that this assumption is too simplistic. Observed dependencies in the evaluation of uncertain outcomes and the likelihood of the events giving rise to them are frequent and systematic. Dependencies seem to derive from general strategic processes that take into consideration asymmetric costs of over vs. underestimates of uncertain quantities. This asymmetriclossfunction interpretation provides a psychological explanation for observed judgments and decisions under uncertainty and links them to other judgment tasks. The decision weights estimated when applying dependentutility models to choices are not simply reflections of perceived subjective probability but a response to several constraints, all of which modify the weight of risky or uncertain outcomes. Perhaps more than any other social science, psychology maintains an ongoing debate about its status as a coherent field of scholarship (cf. Fowler, 1990; Koch, 1969; Simon, 1992), often
On the Intuition of RankDependent Utility
, 2000
"... Among the most popular models for decision under risk and uncertainty are the rankdependent models, introduced by Quiggin and Schmeidler. Central concepts in these models are rankdependence and comonotonicity. It has been suggested in the literature that these concepts are technical tools that hav ..."
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Cited by 34 (0 self)
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Among the most popular models for decision under risk and uncertainty are the rankdependent models, introduced by Quiggin and Schmeidler. Central concepts in these models are rankdependence and comonotonicity. It has been suggested in the literature that these concepts are technical tools that have no intuitive or empirical content. This paper describes such contents. As