TY - JOUR
T1 - The Data of Levy and Levy (2002), "Prospect Theory: Much Ado about Nothing?" Actually Support Prospect Theory
AU - Wakker, P.P.
PY - 2003/1/1
Y1 - 2003/1/1
N2 - Levy and-Levy (Management Science 2002) p resent data that, according to their claims, violate prospect theory. They suggest that prospect theory's hypothesis of an S-shaped value function, concave for gains and convex for losses, is incorrect. However, all the data of Levy and Levy are perfectly consistent with the predictions of prospect theory, as can be verified by simply applying prospect theory formulas. The mistake of Levy and Levy is that they, incorrectly, thought that probability weighting could be ignored.
AB - Levy and-Levy (Management Science 2002) p resent data that, according to their claims, violate prospect theory. They suggest that prospect theory's hypothesis of an S-shaped value function, concave for gains and convex for losses, is incorrect. However, all the data of Levy and Levy are perfectly consistent with the predictions of prospect theory, as can be verified by simply applying prospect theory formulas. The mistake of Levy and Levy is that they, incorrectly, thought that probability weighting could be ignored.
U2 - 10.1287/mnsc.49.7.979.16383
DO - 10.1287/mnsc.49.7.979.16383
M3 - Article
SN - 0025-1909
VL - 49
SP - 979
EP - 981
JO - Management Science
JF - Management Science
ER -