Further Reflections on Prospect Theory

  title={Further Reflections on Prospect Theory},
  author={Susan K. Laury and Charles A. Holt},
This paper reports a new experimental test of prospect theory’s reflection effect. We conduct a sequence of experiments that allow us to directly compare choices under reflected gains and losses where real and hypothetical payoffs range from several dollars to over $100. Lotteries with positive payoffs are transformed into lotteries over losses by reflecting all payoffs around zero. When we use hypothetical payments, more than half of the subjects who are risk averse for gains turn out to be… CONTINUE READING


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