Prospect Theory as a Model of Risky Choice:

Nagatsu, M. (Speaker: Presenter), Marchionni, C. (Speaker: Presenter)

Activity: Participating in or organising an event typesOrganisation and participation in conferences, workshops, courses, seminars

Description

Prospect theory, as originally developed and subsequently refined by Kahneman and Tversky, is widely regarded as the
most sophisticated theoretical achievement of behavioral economics. Its great importance, especially with respect to
the concepts it introduced, is beyond serious dispute. However, like any major scientific model, it is vulnerable to being
interpreted as dogma, as a statement of truth that can be used as an argument-stopper and as a basis for sweeping
rejection of perspectives with which it is in tension. Empirical investigations of prospect theory, both in its original
(1979) articulation and its ‘cumulative’ (1992) version that accommodates econometric identification and estimation,
are equivocal in their results, certainly more interesting than straightforward ‘confirmation’ or ‘refutation’.
Additionally, important questions about prospect theory’s completeness or adequacy as a descriptive theory of choice
under risk and uncertainty spill over into problems of normative assessment, about welfare and well-being, raised by
behavioral and experimental economics. At a time when more and more governments and companies are adopting
policies and strategies based on their interpretations of results from behavioral economics, joint assessment of
prospect theory’s descriptive and normative authority is directly relevant to management of institutional, political,
environmental, and personal risk. In this workshop we will bring together economists and philosophers to critically
review the empirical status of prospect theory, in both original and cumulative forms, along with the implications of
this status for public, corporate and household policies.
Period16 Oct 201717 Oct 2017
Event typeConference
LocationCork, Ireland
Degree of RecognitionInternational