The expo-power value function as a candidate for the work-horse specification in parametric versions of cumulative prospect theory

D. A. Peel; Jie Zhang

doi:10.1016/j.econlet.2009.09.007

The expo-power value function as a candidate for the work-horse specification in parametric versions of cumulative prospect theory

D. A. Peel^*, Jie Zhang

^*Corresponding author for this work

Lancaster University

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

Abstract

The piecewise power value function proposed by Kahneman and Tversky is inconsistent with both theoretical and experimental work. We propose the expo-power function as an alternative to the power function and examine its ability to explain choices in Allais experiments.

Original language	English
Pages (from-to)	326-329
Number of pages	4
Journal	Economics Letters
Volume	105
Issue number	3
DOIs	https://doi.org/10.1016/j.econlet.2009.09.007
Publication status	Published - Dec 2009
Externally published	Yes

Keywords

Cumulative prospect theory
Expo-power value function
Exponential value function

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10.1016/j.econlet.2009.09.007

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title = "The expo-power value function as a candidate for the work-horse specification in parametric versions of cumulative prospect theory",

abstract = "The piecewise power value function proposed by Kahneman and Tversky is inconsistent with both theoretical and experimental work. We propose the expo-power function as an alternative to the power function and examine its ability to explain choices in Allais experiments.",

keywords = "Cumulative prospect theory, Expo-power value function, Exponential value function",

author = "Peel, {D. A.} and Jie Zhang",

year = "2009",

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AU - Peel, D. A.

AU - Zhang, Jie

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N2 - The piecewise power value function proposed by Kahneman and Tversky is inconsistent with both theoretical and experimental work. We propose the expo-power function as an alternative to the power function and examine its ability to explain choices in Allais experiments.

AB - The piecewise power value function proposed by Kahneman and Tversky is inconsistent with both theoretical and experimental work. We propose the expo-power function as an alternative to the power function and examine its ability to explain choices in Allais experiments.

KW - Cumulative prospect theory

KW - Expo-power value function

KW - Exponential value function

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U2 - 10.1016/j.econlet.2009.09.007

DO - 10.1016/j.econlet.2009.09.007

M3 - Article

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SN - 0165-1765

VL - 105

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JO - Economics Letters

JF - Economics Letters

IS - 3

ER -

The expo-power value function as a candidate for the work-horse specification in parametric versions of cumulative prospect theory

Abstract

Keywords

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