Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30262
Year of Publication: 
2010
Series/Report no.: 
Kiel Working Paper No. 1611
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
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

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