Violations of cumulative prospect theory in mixed gambles with moderate probabilities

Guido Baltussen, Thierry Post, Pim Van Vliet

Research output: Contribution to journalArticle

27 Citations (Scopus)

Abstract

In a classroom choice experiment with mixed gambles and moderate probabilities, we find severe violations of cumulative prospect theory (CPT) and of Markowitz stochastic dominance. Our results shed new light on the exchange between Levy and Levy (2002) and Wakker (2003) in this journal.

Original languageEnglish
Pages (from-to)1288-1290
Number of pages3
JournalManagement Science
Volume52
Issue number8
DOIs
Publication statusPublished - Sep 11 2006

Keywords

  • Cumulative prospect theory
  • Expected utility
  • Individual decision making under risk
  • Mixed gambles
  • Stochastic dominance

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research

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