Behavioral Biases and Nonadditive Dynamics in Risk Taking: An Experimental Investigation

Jos\'e Cl\'audio do Nascimento

Papers from arXiv.org

Abstract: This paper investigates the dynamics of gambling and how they can affect risk-taking behavior in regions not explored by Kahneman and Tversky's Prospect Theory. Specifically, it questions why extreme outcomes do not fit the theory and proposes alternative ways to measure prospects. The paper introduces a measure of contrast between gambles and conducts an experiment to test the hypothesis that individuals prospect gambles with nonadditive dynamics differently. The results suggest a strong bias towards certain options, which challenges the predictions of Kahneman and Tversky's theory.

Date: 2019-08, Revised 2023-04
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1908.01709

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