Violations of Cumulative Prospect Theory in Mixed Gambles with Moderate Probabilities
August 2006
Article
volume 52, issue 8 pp 1288-1290.
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In a classroom choice experiment with mixed gambles and moderate probabilities, we find severe violations of cumulative prospect theory (CPT) and of Markowitz stochastic dominance. Our results shed new light on the exchange between Levy and Levy (2002) and Wakker (2003) in this journal.
Keywords
- mathematical statistics
- prospect theory
- choice (psychology)
- stochastic analysis
- game theory
- correlation (statistics)
- management research
- management science
- probabilities
