Cumulative Prospect Theory and the St. Petersburg Paradox
We find that in cumulative prospect theory (CPT) with a concave value function in gains, a lottery with finite expected value may have infinite subjective value. This problem does not occur in expected utility theory. The paradox occurs in particular in the setting and the parameter regime studied b...
| Veröffentlicht in: | Economic Theory. - Springer, 1991. - 28(2006), 3, Seite 665-679 |
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| Format: | Online-Aufsatz |
| Sprache: | English |
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2006
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| Zugriff auf das übergeordnete Werk: | Economic Theory |
| Schlagworte: | Cumulative prospect theory Probability weighting function St. Petersburg paradox C91 D81 Mathematics Philosophy Behavioral sciences Economics |
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