Authors
James C Cox, Vjollca Sadiraj
Publication date
2006/7/1
Journal
Games and Economic Behavior
Volume
56
Issue
1
Pages
45-60
Publisher
Academic Press
Description
A growing literature reports the conclusions that: (a) expected utility theory does not provide a plausible theory of risk aversion for both small-stakes and large-stakes gambles; and (b) this decision theory should be replaced with an alternative theory characterized by loss aversion. This paper explains that the arguments in previous literature fail to support these conclusions. Either concavity calibration has no general implication for expected utility theory or it has problematic implications for all decision theories that involve concave transformations (utility or value functions) of positive money payoffs, which makes loss aversion irrelevant to the argument.
Total citations
Scholar articles
JC Cox, V Sadiraj - Games and Economic Behavior, 2006
JC Cox, V Sadiraj - Unpublished Manuscript, 2004
J Cox, V Sadiraj - 2001
JC Cox, V Sadiraj - 2002