- Gains and losses in nonadditive expected utility
- Book title
- Models and experiments on risk and rationality
- Number of pages
- Dordrecht: Kluwer Academic Publishers
- Theory and decision library Series B, Mathematical and statistical methods
- Volume | Edition (Serie)
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
- This paper provides a simple approach for deriving cumulative prospect theory. The key axiom is a cumulative dominance axiom which requires that a prospect be judged more attractive if in it greater gains are more likely and greater losses are less likely. In the presence of this cumulative dominance, once a model is satisfied on a "sufficiently rich" domain, then it holds everywhere. This leads to highly transparent results.
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