Arbeitspapier

What Determines the Shape of the Probability Weighting Function?

When valuing risky prospects, people typically overweight small probabilities and underweight medium and large probabilities, but there is vast heterogeneity in individual behavior. We explore the relationship between person-specific probability weights, estimated from investment decisions in a laboratory experiment, and personal characteristics. We find considerable interaction effects with gender. While women’s probability weighting is strongly and significantly susceptible to mood states, men’s is not. Moreover, we show that cheerful and optimistic people weight probabilities of investment gains more favorably than do pessimistic people. People who calculate expected payoffs are less prone to probability distortions than those who do not use a lottery’s expected value as a decision criterion. None of the factors studied impact subjects’ valuations of monetary outcomes.

Sprache
Englisch

Erschienen in
Series: Economics Working Paper Series ; No. 06/54

Klassifikation
Wirtschaft
Thema
Probability Weighting Function
Prospect Theory
Risk Aversion
Gender Differences
Erwartungsnutzen
Risikoaversion
Geschlecht
Prospect Theory
Entscheidung unter Risiko

Ereignis
Geistige Schöpfung
(wer)
Fehr-Duda, Helga
Schürer, Marc
Schubert, Renate
Ereignis
Veröffentlichung
(wer)
ETH Zurich, CER-ETH - Center of Economic Research
(wo)
Zurich
(wann)
2006

DOI
doi:10.3929/ethz-a-005229431
Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Fehr-Duda, Helga
  • Schürer, Marc
  • Schubert, Renate
  • ETH Zurich, CER-ETH - Center of Economic Research

Entstanden

  • 2006

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