Starting points' effects on risk-taking behavior

Arbeitspapier

We formally represent the effects of prior gains and losses in a simple dynamic preference calculus based on prospect theory's value function and thoughts adapted from aspiration level theories. We investigate our predictions in questionnaire experiments. Since we document a strong effect of prior gains and losses in our main study on entrepreneurial decision making, findings are consistent with a difference between the actual status quo and temporarily invariant aspiration levels. However, the general level of willingness to pay (WTP), differences between gain and loss domains, and preference orders within the gain domain are inconsistent with prospect theory's prediction. In the loss domain, results are less straightforward but only interpretable on the joint basis of prospect theory, starting point formula, and an additional survival point. Altogether, results are a challenge to prescriptive as well as descriptive models of decision making relying on context-independent value functions. Implications for a further development of descriptive decision theoretic models based on aspiration levels to account for dynamic starting points effects are discussed.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: SFB 373 Discussion Paper ; No. 2002,15

Klassifikation und Themen

• Klassifikation: Wirtschaft

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Schade, Christian ; Steul, Martina ; Schröder, Andreas
• Ereignis: Veröffentlichung
• (wer): Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes
• (wo): Berlin
• (wann): 2002

Weitere Informationen

• Handle: http://hdl.handle.net/10419/65299
• URN: urn:nbn:de:kobv:11-10048675
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ