New Paradoxes of Risky Decision Making that Refute Prospect Theories Outline Cumulative Prospect Theory/ Rank-Dependent Utility (RDU) “Prior” TAX Model TAX Parameters

New Paradoxes of Risky Decision Making that Refute Prospect Theories Outline Cumulative Prospect Theory/ Rank-Dependent Utility (RDU) “Prior” TAX Model TAX Parameters www.phwiki.com

New Paradoxes of Risky Decision Making that Refute Prospect Theories Outline Cumulative Prospect Theory/ Rank-Dependent Utility (RDU) “Prior” TAX Model TAX Parameters

Locke, Juliane, Contributing Writer has reference to this Academic Journal, PHwiki organized this Journal New Paradoxes of Risky Decision Making that Refute Prospect Theories Michael H. Birnbaum Fullerton, Cali as long as nia, USA Outline I will review tests between Cumulative Prospect Theory (CPT) in addition to Transfer of Attention eXchange (TAX) model. Emphasis will be on critical properties that test between these two non-nested theories. Cumulative Prospect Theory/ Rank-Dependent Utility (RDU)

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“Prior” TAX Model Assumptions: TAX Parameters For 0 < x < $150 u(x) = x Gives a decent approximation. Risk aversion produced by d. d = 1 . TAX CE with delta = 0 TAX: Effect of Delta TAX Model TAX in addition to CPT nearly identical as long as binary (two-branch) gambles CE (x, p; y) is an inverse-S function of p according to both TAX in addition to CPT, given their typical parameters. There as long as e, there is no point trying to distinguish these models with binary gambles. Non-nested Models CPT in addition to TAX nearly identical inside the prob. simplex Testing CPT Coalescing Stochastic Dominance Lower Cum. Independence Upper Cumulative Independence Upper Tail Independence Gain-Loss Separability TAX:Violations of: Testing TAX Model 4-Distribution Independence (RS’) 3-Lower Distribution Independence 3-2 Lower Distribution Independence 3-Upper Distribution Independence (RS’) Res. Branch Indep (RS’) CPT: Violations of: Stochastic Dominance A test between CPT in addition to TAX: G = (x, p; y, q; z) vs. F = (x, p – s; y’, s; z) Note that this recipe uses 4 distinct consequences: x > y’ > y > z > 0; outside the probability simplex defined on three consequences. CPT choose G, TAX choose F Test if violations due to “error.” Violations of Stochastic Dominance 122 Undergrads: 59% two violations (BB) 28% Pref Reversals (AB or BA) Estimates: e = 0.19; p = 0.85 170 Experts: 35% repeat violations 31% Reversals Estimates: e = 0.20; p = 0.50 Chi-Squared test reject H0: p violations < 0.4 Pie Charts Aligned Table: Coalesced Summary: 23 Studies of SD, 8653 participants Large effects of splitting vs. coalescing of branches Small effects of education, gender, study of decision science Very small effects of probability as long as mat, request to justify choice. Miniscule effects of event framing (framed vs unframed) Lower Cumulative Independence R: 39% S: 61% .90 to win $3 .90 to win $3 .05 to win $12 .05 to win $48 .05 to win $96 .05 to win $52 R'': 69% S'': 31% .95 to win $12 .90 to win $12 .05 to win $96 .10 to win $52 Upper Cumulative Independence R': 72% S': 28% .10 to win $10 .10 to win $40 .10 to win $98 .10 to win $44 .80 to win $110 .80 to win $110 R''': 34% S''': 66% .10 to win $10 .20 to win $40 .90 to win $98 .80 to win $98 Summary: UCI & LCI 22 studies with 33 Variations of the Choices, 6543 Participants, & a variety of display as long as mats in addition to procedures. Significant Violations found in all studies. Restricted Branch Indep. S’: .1 to win $40 .1 to win $44 .8 to win $100 S: .8 to win $2 .1 to win $40 .1 to win $44 R’: .1 to win $10 .1 to win $98 .8 to win $100 R: .8 to win $2 .1 to win $10 .1 to win $98 3-Upper Distribution Ind. S’: .10 to win $40 .10 to win $44 .80 to win $100 S2’: .45 to win $40 .45 to win $44 .10 to win $100 R’: .10 to win $4 .10 to win $96 .80 to win $100 R2’: .45 to win $4 .45 to win $96 .10 to win $100 3-Lower Distribution Ind. S’: .80 to win $2 .10 to win $40 .10 to win $44 S2’: .10 to win $2 .45 to win $40 .45 to win $44 R’: .80 to win $2 .10 to win $4 .10 to win $96 R2’: .10 to win $2 .45 to win $4 .45 to win $96 Locke, Juliane Napa Valley Register Contributing Writer www.phwiki.com

Gain-Loss Separability Notation Wu in addition to Markle Result

Birnbaum & Bahra-% F Allais Paradox Dissection Summary: Prospect Theories not Descriptive Violations of Coalescing Violations of Stochastic Dominance Violations of Gain-Loss Separability Dissection of Allais Paradoxes: viols of coalescing in addition to restricted branch independence; RBI violations opposite of Allais paradox.

Implications Results indicate that neither PT nor CPT are descriptive of risky decision making. Editing rules of combination, cancellation, & dominance detection refuted. TAX correctly predicts the violations of CPT. CPT implies violations of TAX that either fail or show the opposite pattern from predicted by CPT.

Locke, Juliane Contributing Writer

Locke, Juliane is from United States and they belong to Napa Valley Register and they are from  Middletown, United States got related to this Particular Journal. and Locke, Juliane deal with the subjects like Agriculture; Conservation

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