Evaluating the Role of Three Basic Factors of Prospect Theory in Decision Making

The main aim of this paper is to empirically evaluate the role of three significant factors of the Prospect Theory: the S-shaped value function, the loss aversion, and the distortion of probability, in decision making. In order to do this, a general behavioral reward-risk model is firstly setup and an empirical evaluation about the role of each of these factor, separately and in interaction, on the optimal solutions of the problem follows. For...