5 Questions
According to Prospect Theory, decision-making under risk involves a two-step choice process. What are the two steps?
Editing and evaluation
Prospect Theory's editing phase involves the preliminary analysis of offered prospects. What is the purpose of this phase?
To facilitate evaluation
Prospect Theory's evaluation phase involves individuals evaluating each edited prospect. How do individuals choose the prospect with the highest value?
By choosing the prospect with the highest value
What are some examples of violations of Expected Utility Theory (EUT)?
Allais paradox and Ellsberg paradox
Prospect Theory involves the use of heuristic rules. Are these rules necessarily conscious?
No, they are not necessarily conscious
Test your knowledge on prospect theory and its application in behavioral economics. This quiz will cover the basics of prospect theory, violations of expected utility theory, and the two-step choice process involved in decision making under risk.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
