The main modification to Prospect Theory is that, as in rank-dependent expected utility theory, cumulative probabilities are transformed, rather than the probabilities itself.
22.
In 1728 he proposed a solution to the St . Petersburg Paradox that came very close to the concept of expected utility theory given ten years later by Daniel Bernoulli.
23.
The revival of subjective probability theory, from the work of Leonard Savage and others, extended the scope of expected utility theory to situations where subjective probabilities can be used.
24.
The mathematical correctness of expected utility theory and the salience of its primitive concepts do not guarantee that expected utility theory is a reliable guide to human behavior or optimal practice.
25.
The mathematical correctness of expected utility theory and the salience of its primitive concepts do not guarantee that expected utility theory is a reliable guide to human behavior or optimal practice.
26.
Gamble A to Gamble B if and only if you believe that drawing a red ball is more likely than drawing a black ball ( according to expected utility theory ).
27.
Given its motivations and approach, generalized expected utility theory may properly be regarded as a subfield of behavioral economics, but it is more frequently located within mainstream economic theory.
28.
.. . that "'prospect theory "'was developed by Daniel Kahneman and Amos Tversky in 1979 as a psychologically realistic alternative to expected utility theory?
29.
The first important use of the expected utility theory was that of John von Neumann and Oskar Morgenstern, who used the assumption of expected utility maximization in their formulation of game theory.
30.
It differs from expected utility theory in that it takes into account the relativity of how people view utility and incorporates loss aversion, or the tendency to react more strongly to losses rather than gains.
