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Prospect Theory and Limit Lines
Author(s) -
WuChien Jya Syin,
Apostolakis George
Publication year - 1983
Publication title -
risk analysis
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.972
H-Index - 130
eISSN - 1539-6924
pISSN - 0272-4332
DOI - 10.1111/j.1539-6924.1983.tb00119.x
Subject(s) - limit (mathematics) , prospect theory , context (archaeology) , expected utility hypothesis , risk analysis (engineering) , mathematical economics , econometrics , mathematics , economics , microeconomics , business , geography , mathematical analysis , archaeology
Risk acceptance criteria in the form of limit lines are investigated in the context of prospect theory. This theory departs from utility theory in several respects, an important one being the use of weights other than probabilities in the evaluation of the expected impact of uncertain outcomes. Hypothetical functions reflecting certain attitudes toward consequences and rare events are developed and combined to produce several limit lines.