Prospect theory: analysis of decision under risk

@article{Kahneman1979ProspectTA,
  title={Prospect theory: analysis of decision under risk},
  author={Daniel Kahneman and Amos Tversky},
  journal={Econometrica},
  year={1979},
  volume={47},
  pages={263-291}
}
Analysis of decision making under risk has been dominated by expected utility theory, which generally accounts for people's actions. Presents a critique of expected utility theory as a descriptive model of decision making under risk, and argues that common forms of utility theory are not adequate, and proposes an alternative theory of choice under risk called prospect theory. In expected utility theory, utilities of outcomes are weighted by their probabilities. Considers results of responses to… Expand
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  • Sandeep Mishra
  • Psychology, Medicine
  • Personality and social psychology review : an official journal of the Society for Personality and Social Psychology, Inc
  • 2014
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This review critically examines four of the most influential theories of decision-making from economics, psychology, and biology: expected utility theory, prospect theory, risk-sensitivity theory, and heuristic approaches. Expand
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A real case study involving a decision problem regarding the Streicker Bridge, a pedestrian bridge on Princeton University campus, is analyzed to verify the differences between the two approaches and to investigate how the two models are sensitive to unpacking probabilities, which represent a common cognitive bias in irrational behaviors. Expand
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