Prospect Theory: An Analysis of Decision under Risk

# Prospect Theory: An Analysis of Decision under Risk > OpenAlex Metadata Hub · https://openalex.org/W3011865677 ## Bibliographic - **DOI:** 10.2307/1914185 - **Year:** 1979 - **Citations:** 47180 - **Open Access:** No (closed) - **License:** — - **Source:** https://doi.org/10.2307/1914185 ## Authors - Daniel Kahneman - Amos Tversky ## Abstract This paper presents a critique of expected utility theory as a descriptive model of decision making under risk, and develops an alternative model, called prospect theory. Choices among risky prospects exhibit several pervasive effects that are inconsistent with the basic tenets of utility theory. In particular, people underweight outcomes that are merely probable in comparison with outcomes that are obtained with certainty. This tendency, called the certainty effect, contributes to risk aversion in choices involving sure gains and to risk seeking in choices involving sure losses. In addition, people generally discard components that are shared by all prospects under consideration. This tendency, called the isolation effect, leads to inconsistent preferences when the same choice is presented in different forms. An alternative theory of choice is developed, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights. The value function is normally concave for gains, commonly convex for losses, and is generally steeper for losses than for gains. Decision weights are generally lower than the corresponding probabilities, except in the range of low prob-abilities. Overweighting of low probabilities may contribute to the attractiveness of both insurance and gambling. 1. ## Keywords Decision theory, Economics, Prospect theory, Econometrics, Mathematical economics, Microeconomics ## Concepts - Decision theory - Economics - Prospect theory - Econometrics - Mathematical economics - Microeconomics --- *Metadata only — full text not imported unless Open Access license permits.*

Bài “Prospect Theory: An Analysis of Decision under Risk” được TradingBase chuyển thành Knowledge Product cho trader — không phải trang đọc abstract OpenAlex. Tóm lược học thuật (đã diễn giải): This paper presents a critique of expected utility theory as a descriptive model of decision making under risk, and develops an alternative model, called prospect theory. Choices among risky prospects exhibit several pervasive effects that are inconsistent with the basic tenets of utility theory. In particular, people underweight outcomes that are merely probable in comparison with outcomes that are obtained with certainty. This tendency, called the certainty effect, contributes to risk aversion in choices involving sure gains and to risk seeking in choices involving sure losses. In addition, people generally discard components that are shared by all prospects under consideration. This tendency, called the isolation effect, leads to inconsistent preferences when the same choice is presented in different forms. An alternative theory of choice is developed, in which value is assigned to ga… Phần Trading Insights bên dưới nối nghiên cứu với Forex, vàng, USD, lãi suất và risk regime — để bạn đưa vào journal và playbook. Metadata DOI/OA chỉ là rail tham chiếu; nội dung chính là summary, takeaways và ứng dụng thị trường do Content Factory sinh.