quite cognitively demanding

Pin It

vrtrfashion, member

no recommendations

Add Comment
Print

Because the value function is a ratio scale (unique to multiplication by a positive constant) a separate procedure using mixed (gain_ loss) gambles is required to assess loss aversion. A parameter-free procedure has been advanced by Abdellaoui et al . (2007b) . Details of the procedure are beyond the scope of this chapter, but the gist is as follows. The first step entails determining, through a series of indifferences between prospects, the probabilities pg and pl for which w_ ( pg ) and w_ ( pl ) _ 1/2. This allows determination, in a second stage, of outcome amounts that are midpoints in value space for losses. The third stage links value for losses and gains through a series of indifferences that determines a gain outcome that is the mirror image of a loss outcome in value space (i.e., has the same absolute value of utility/ value). Finally, the fourth step repeats the second step by determining outcomes that are midpoints in value space for gains. The method of Abdellaoui et al .

(2007b) is mathematically elegant and yielded clean results consistent with prospect theory in the analysis of aggregate data from a sample of 48 economics students. However, the task is cognitively demanding, as it involves choices between pairs of two-outcome gambles, and laborious, as it entails a complex fourstep procedure. Non-parametric methods tend to be less time consuming than statistical methods of elicitation. Also, unlike semi-parametric and fully parametric methods, they make no assumptions concerning the functional form of the value and weighting functions that might distort measurement, though functions can be fitted to the measured values and weights that are obtained. PROSPECT THEORY MEASUREMENT 8Note that because the new outcomes may not be included in the standard sequence this method requires an interpolation procedure and thus is not fully non-parametric. II.

BEHAVIORAL ECONOMICS AND THE BRAIN 162 11. PROSPECT THEORY AND THE BRAIN Moreover, non-parametric methods preserve a direct link between specific choices and measured utilities so that specific inconsistencies can be traced to particular choices. Unfortunately, non-parametric methods are generally quite cognitively demanding, requiring choices between multiple two-outcome prospects (or even more complicated choices).Gen X Mom

Add Comment Print

how to use a sewing machine  

Back to List

Inquiry: How to Xmas ornaments