Subjective Expected Utility Theory and Prospect Theory: Critical Comparison and Practical Application
Abstract
This paper reviews the development process of Subjective Expected utility Theory and Prospect Theory, including the core viewpoints and formula models of the two theories. Examples are given to illustrate the contributions of the two theories in the study of human decision-making.
Keywords
Full Text:
PDFReferences
Harold William Kuhn, John von Neumann, Oskar Morgenstern, Ariel Rubinstein. Theory of Games and Economic Behavior[M]. Princeton University Press: 2007-01-01.
Savage LJ. (1954). The Foundations of Statistics. Wiley Publications in Statistics.
Edgardo B & Nicola M, 2021. "Reconsidering Herbert A. Simon’s Major Themes in Economics: Towards an Experimentally Grounded Capital Structure Theory Drawing from His Methodological Conjectures," Computational Economics, Springer; Society for Computational Economics, vol. 57(3), pages 799-823, March.
Allais M. Le Comportement de l'Homme Rationnel devant le Risque: Critique des Postulats et Axiomes de l'Ecole Americaine[J]. Econometrica, 1953, 21(4): 503–546.
Tversky M, Slovic P, Kahneman D. The Causes of Preference Reversal [J]. The American Economic Review, 1990, 80(1): 204–217.
Kahneman D, Tversky A. Prospect Theory: An Analysis of Decision under Risk[J]. Econometrica,1979, 47(2): 263–292.
Levy H, Wiener Z. Prospect theory and utility theory: Temporary versus permanent attitude toward risk[J]. Journal of Economics and Business, 2013, 68: 1-23.
DOI: http://dx.doi.org/10.18686/mmf.v6i4.5368
Refbacks
- There are currently no refbacks.
