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Title:Endogenizing prospect theory's reference point PDF Logo
Authors:Schmidt, Ulrich
Zank, Horst
Issue Date:2010
Series/Report no.:Kiel working paper 1611
Abstract:In previous models of (cumulative) prospect theory reference-dependence of preferences is imposed beforehand and the location of the reference point is exogenously determined. This note provides a foundation of prospect theory, where reference-dependence is derived from preference conditions and a unique reference point arises endogenously.
Subjects:Prospect theory
reference point
diminishing sensitivity
loss aversion
JEL:D81
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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