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Never, Ever Getting Started: On Prospect Theory Without Commitment
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AI
DOI：10.1111/mafi.70028.png)
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Abstract
En 中文
Prospect theory is arguably the most prominent alternative to expected utility theory. We study the investment or gambling behavior of a prospect theory decision maker who is aware of his time-inconsistency but lacks commitment. For the empirically relevant prospect theory specifications, we obtain the extreme prediction that such a decision maker never gambles or invests in the stock market-even if expected gains are arbitrarily high. Our analysis illustrates some of the challenges in applying prospect theory to dynamic settings.
Keywords:
prospect theory
risk-taking
skewness preference
time inconsistency
Journal
M
IF:
2.4
Papers:
24
Citations:
0