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| Author: | Wu, G. Gonzalez, R. |
| Title: | Curvature of the probability weighting function |
| Journal: | Management Science
1996 : DEC, VOL. 42:12, p. 1676-1690 |
| Index terms: | PROBABILITY FUNCTIONAL ANALYSIS MANAGEMENT |
| Language: | eng |
| Abstract: | When individuals choose among risky alternatives, the Psychological weight attached to an outcome may not correspond to the probability of that outcome. In rank-dependent utility theories, including prospect theory, the probability weighting function permits probabilities to be weighted nonlinearly. Previous empirical studies of the weighting function have suggested an inverse S-shaped function, first concave and then convex. However, these studies suffer from a methodological shortcoming: estimation procedures have required assumptions about the functional form of the value and/or weighting functions. |
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