Abstract
Prospect theory sought to provide a descriptive model of risky choice which could accommodate a number of seemingly systematic violations of conventional ‘expected utility’ analysis. Although there are phenomena which the model cannot explain (even in its later ‘cumulative’ form), it constitutes a landmark in the development of alternative theories which have modified standard theory and/or have tried to incorporate psychological factors into decision theories.
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Loomes, G. (2018). Prospect Theory. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2793
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2793
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