Prospect theory ≈ Prospect theory
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Consumer attitudes and behavior: the theory of planned behavior applied to food consumption decisions Open
The author compares the multi-attribute and subjective expected utility (SEU) models popular in research on consumer behavior to the approach offered by the theory of planed behavior (TPB). Unlike the multi-attribute and SEU models, the TP…
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Managerial Risk Taking Open
Managerial risk taking is a critical aspect of strategic management. To improve competitive advantage and performance, managers need to take risks, often in an uncertain environment. Formal economic assumptions of risk taking suggest that …
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Replicating patterns of prospect theory for decision under risk Open
Prospect theory is among the most influential frameworks in behavioural science, specifically in research on decision-making under risk. Kahneman and Tversky's 1979 study tested financial choices under risk, concluding that such judgements…
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The Impact of Psychological Factors on Investors’ Decision Making in Malaysian Stock Market: A Case of Klang Valley and Pahang Open
For years, traditional finance has always presumed that investors are rational in their decision making process in the stock market about risk return trade-offs and maximizing utility. However, behavioral finance studies revealed that huma…
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Divergence between individual perceptions and objective indicators of tail risks: Evidence from floodplain residents in New York City Open
This study provides the first comprehensive analysis of individual perceptions of tail risks. It focuses not only on the probability, as has been studied by Nicholas Barberis and others, but also on anticipation of damage. We examine how t…
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Searching for the Reference Point Open
Although reference dependence plays a central role in explaining behavior, little is known about the way that reference points are selected. This paper identifies empirically which reference point people use in decision under risk. We assu…
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Integrating Household Risk Mitigation Behavior in Flood Risk Analysis: An Agent‐Based Model Approach Open
Recent studies showed that climate change and socioeconomic trends are expected to increase flood risks in many regions. However, in these studies, human behavior is commonly assumed to be constant, which neglects interaction and feedback …
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Prospect Theory and Stock Market Anomalies Open
We present a new model of asset prices in which investors evaluate risk according to prospect theory and examine its ability to explain 23 prominent stock market anomalies. The model incorporates all of the elements of prospect theory, acc…
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The Psychological and Neural Basis of Loss Aversion Open
Loss aversion is a central element of prospect theory, the dominant theory of decision making under uncertainty for the past four decades, and refers to the overweighting of potential losses relative to equivalent gains, a critical determi…
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An Analysis of Behavioral Biases in Investment Decision-Making Open
Individual investor’s behavior is extensively influenced by various biases that highlighted in the growing discipline of behavior finance. Therefore, this study is also one of another effort to assess the impact of behavioral biases in inv…
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Testing Ambiguity Models through the Measurement of Probabilities for Gains and Losses Open
This paper reports on two experiments that test the descriptive validity of ambiguity models using a natural source of uncertainty (the evolution of stock indices) and both gains and losses. We observed violations of probabilistic sophisti…
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Behavioral Finance: Quo Vadis? Open
Behavioral finance endeavors to bridge the gap between finance and psychology. Now an established field, behavioral finance studies investor decision processes which in turn shed light on anomalies, i.e., departures from neoclassical finan…
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Moderating Loss Aversion: Loss Aversion Has Moderators, But Reports of its Death are Greatly Exaggerated Open
Loss aversion, the principle that losses impact decision making more than equivalent gains, is a fundamental idea in consumer behavior and decision making, though its existence has recently been called into question. Across five unique sam…
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Do Politicians Take Risks Like the Rest of Us? An Experimental Test of Prospect Theory Under MPs Open
Political psychologists have been quick to use prospect theory in their work, realizing its potential for explaining decisions under risk. Applying prospect theory to political decision‐making is not without problems, though, and here we a…
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Experimental Development of Sealed-Bid Auction Theory; Calibrating Controls for Risk Aversion Open
This article offers a brief survey of bidding theory in high price auctions, of experimental studies of behavior in such auctions, and of the interplay between the design and results of the experiments and efforts to further develop the th…
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Personality traits and investor profile analysis: A behavioral finance study Open
This study investigates which of four paradigms best portrays the risk profile manifest by investors in their financial asset investment decisions. The paradigms used to explain this profile were: prospect theory, investor profile analysis…
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Behavioral Finance Biases in Investment Decision Making Open
Traditional finance suggests that investments made by rational behaviors investors examine risk and return before decision making to gain maximum profit later behavioral finance challenge traditional finance and introduce psychological fac…
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The relevance of Kahneman and Tversky's concept of framing to organization behavior Open
Recent research by Kahneman and Tversky (1979) has demonstrated that individual decisions are systematically affected by the way in which problems are presented. Specifically, individuals tend to be risk averse to problems framed in the po…
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Climate risk and state-contingent technology adoption: shocks, drought tolerance and preferences Open
Climate risk represents an increasing threat to poor and vulnerable farmers in drought-prone areas of Africa. This study assesses the maize adoption responses of food insecure farmers in Malawi, where drought-tolerant (DT) maize was recent…
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Models of Affective Decision Making Open
Intuitively, how you feel about potential outcomes will determine your decisions. Indeed, an implicit assumption in one of the most influential theories in psychology, prospect theory, is that feelings govern choice. Surprisingly, however,…
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Behavioral finance factors and investment decisions: A mediating role of risk perception Open
Modern finance theory assumes that the stock market is efficient, and stock prices reflect all available information. However, behavioral finance theory argues that stock prices can be influenced by psychological and emotional factors. Thi…
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Loss Aversion and Consumption Choice: Theory and Experimental Evidence Open
We analyze a consumer-choice model with price uncertainty, loss aversion, and expectation-based reference points. The implications of this model are tested in an experiment in which participants have to make a consumption choice between tw…
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AN ENHANCEMENT EDAS METHOD BASED ON PROSPECT THEORY Open
Decision-making is the process of carefully considering multiple options and choosing the best one. The EDAS (evaluation based on distance from average solution) method has been studied in many multi-attributes decision-making (MADM) probl…
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Prospect theory and the decision to move or stay Open
Significance We use prospect theory and the endowment effect to provide a theoretical basis for an integrated approach to residential moving and residential staying. We link measures of risk aversion and the endowment effect to explain the…
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Loss aversion, overconfidence of investors and their impact on market performance evidence from the US stock markets Open
Purpose The current study aims to investigate the impacts of two behavioral biases, namely, loss aversion and overconfidence on the performance of US companies. First, the impact of loss aversion on the economic performance of companies wa…
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The construct–behavior gap in behavioral decision research: A challenge beyond replicability. Open
Behavioral decision research compares theoretical constructs like preferences to behavior such as observed choices. Three fairly common links from constructs to behavior are (1) to tally, across participants and decision problems, the numb…
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Risk Aversion and the Long Run Open
This article argues that Lara Buchak's risk-weighted expected utility (REU) theory fails to offer a true alternative to expected utility theory. Under commonly held assumptions about dynamic choice and the framing of decision problems, rat…
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Prospect Theory in Times of a Pandemic: The Effects of Gain versus Loss Framing on Risky Choices and Emotional Responses during the 2020 Coronavirus Outbreak – Evidence from the US and the Netherlands Open
During the 2020 coronavirus pandemic, governments across the globe relied heavily on the legacy media, not only to inform citizens about fast-paced developments in the midst of a crisis, but also to stimulate compliance with strict interve…
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The Limits of Expectations-Based Reference Dependence Open
Theories of expectations-based reference-dependent preferences have provided a critical modeling innovation, incorporating a structured theory of the formation of reference points. An important prediction of these models is a monotone resp…
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An interdisciplinary framework to study farmers decisions on adoption of innovation: Insights from Expected Utility Theory and Theory of Planned Behavior Open
This study presented a conceptual framework based on Expected Utility Theory (EUT) and Theory of Planned Behavior (TPB) to study farmers' decision on adoption of innovations. The framework explains the adoption decisions as a dynamic proce…