@techreport{Vinokur2009Evaluation,
abstract = {The Prospect Theory proposes to assess outcomes relative to a reference point (or benchmark). Although the literature recognises the relevance of dynamic benchmarks, most of the applications of Prospect Theory employ static reference points (or a status quo). This paper aims to develop a Prospect Theory framework for investment under uncertainty subject to a dynamic reference point, within the context of environmental policy making, where the distinction between a dynamic and a static frameworks is crucial. I evince that, in contrast to the static framework, in a dynamic framework the investor measures not only the absolute but also the relative risk premium (Sharpe ratio) of the investment opportunity, incorporating the risks and returns of a reference portfolio. I propose that there exists a relation between static and dynamic frameworks. Using the dynamic framework, I argue that in the environmental context international co-operation is the key to a successful environmental policy.},
address = {London},
author = {Leon Vinokur},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {D46; G18; Q58; 330; prospect theory; dynamic reference; sustainable development; Prospect Theory; Werttheorie; Nachhaltige Entwicklung; Internationale Umweltpolitik; Dynamisches Modell; Theorie},
language = {eng},
number = {651},
publisher = {Queen Mary, Univ. of London, School of Economics and Finance},
title = {Evaluation with dynamic reference: Sustainable investment},
type = {Working Paper // School of Economics and Finance, Queen Mary, University of London},
url = {http://hdl.handle.net/10419/55191},
year = {2009}
}
