Prospect Theory

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Prospect Theory

Author : Peter P. Wakker
Publisher : Cambridge University Press
ISBN 13 : 1139489100
Total Pages : 519 pages
Book Rating : 4.1/5 (394 download)

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Book Synopsis Prospect Theory by : Peter P. Wakker

Download or read book Prospect Theory written by Peter P. Wakker and published by Cambridge University Press. This book was released on 2010-07-22 with total page 519 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prospect Theory: For Risk and Ambiguity, provides a comprehensive and accessible textbook treatment of the way decisions are made both when we have the statistical probabilities associated with uncertain future events (risk) and when we lack them (ambiguity). The book presents models, primarily prospect theory, that are both tractable and psychologically realistic. A method of presentation is chosen that makes the empirical meaning of each theoretical model completely transparent. Prospect theory has many applications in a wide variety of disciplines. The material in the book has been carefully organized to allow readers to select pathways through the book relevant to their own interests. With numerous exercises and worked examples, the book is ideally suited to the needs of students taking courses in decision theory in economics, mathematics, finance, psychology, management science, health, computer science, Bayesian statistics, and engineering.

Prospect Theory

Author : Daniel Kahneman
Publisher :
ISBN 13 :
Total Pages : 27 pages
Book Rating : 4.:/5 (53 download)

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Book Synopsis Prospect Theory by : Daniel Kahneman

Download or read book Prospect Theory written by Daniel Kahneman and published by . This book was released on 1979 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Handbook of the Fundamentals of Financial Decision Making

Author : Leonard C. MacLean
Publisher : World Scientific
ISBN 13 : 9814417351
Total Pages : 941 pages
Book Rating : 4.8/5 (144 download)

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Book Synopsis Handbook of the Fundamentals of Financial Decision Making by : Leonard C. MacLean

Download or read book Handbook of the Fundamentals of Financial Decision Making written by Leonard C. MacLean and published by World Scientific. This book was released on 2013 with total page 941 pages. Available in PDF, EPUB and Kindle. Book excerpt: This handbook in two parts covers key topics of the theory of financial decision making. Some of the papers discuss real applications or case studies as well. There are a number of new papers that have never been published before especially in Part II.Part I is concerned with Decision Making Under Uncertainty. This includes subsections on Arbitrage, Utility Theory, Risk Aversion and Static Portfolio Theory, and Stochastic Dominance. Part II is concerned with Dynamic Modeling that is the transition for static decision making to multiperiod decision making. The analysis starts with Risk Measures and then discusses Dynamic Portfolio Theory, Tactical Asset Allocation and Asset-Liability Management Using Utility and Goal Based Consumption-Investment Decision Models.A comprehensive set of problems both computational and review and mind expanding with many unsolved problems are in an accompanying problems book. The handbook plus the book of problems form a very strong set of materials for PhD and Masters courses both as the main or as supplementary text in finance theory, financial decision making and portfolio theory. For researchers, it is a valuable resource being an up to date treatment of topics in the classic books on these topics by Johnathan Ingersoll in 1988, and William Ziemba and Raymond Vickson in 1975 (updated 2 nd edition published in 2006).

Choices, Values, and Frames

Author : Daniel Kahneman
Publisher : Cambridge University Press
ISBN 13 : 1107651069
Total Pages : 864 pages
Book Rating : 4.1/5 (76 download)

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Book Synopsis Choices, Values, and Frames by : Daniel Kahneman

Download or read book Choices, Values, and Frames written by Daniel Kahneman and published by Cambridge University Press. This book was released on 2000-09-25 with total page 864 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents the definitive exposition of 'prospect theory', a compelling alternative to the classical utility theory of choice. Building on the 1982 volume, Judgement Under Uncertainty, this book brings together seminal papers on prospect theory from economists, decision theorists, and psychologists, including the work of the late Amos Tversky, whose contributions are collected here for the first time. While remaining within a rational choice framework, prospect theory delivers more accurate, empirically verified predictions in key test cases, as well as helping to explain many complex, real-world puzzles. In this volume, it is brought to bear on phenomena as diverse as the principles of legal compensation, the equity premium puzzle in financial markets, and the number of hours that New York cab drivers choose to drive on rainy days. Theoretically elegant and empirically robust, this volume shows how prospect theory has matured into a new science of decision making.

Risk-Taking in International Politics

Author : Rose McDermott
Publisher : University of Michigan Press
ISBN 13 : 9780472087877
Total Pages : 256 pages
Book Rating : 4.0/5 (878 download)

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Book Synopsis Risk-Taking in International Politics by : Rose McDermott

Download or read book Risk-Taking in International Politics written by Rose McDermott and published by University of Michigan Press. This book was released on 2001 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: Discusses the way leaders deal with risk in making foreign policy decisions

Prospect Theory and Foreign Policy Analysis in the Asia Pacific

Author : Kai He
Publisher : Routledge
ISBN 13 : 1135131198
Total Pages : 166 pages
Book Rating : 4.1/5 (351 download)

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Book Synopsis Prospect Theory and Foreign Policy Analysis in the Asia Pacific by : Kai He

Download or read book Prospect Theory and Foreign Policy Analysis in the Asia Pacific written by Kai He and published by Routledge. This book was released on 2013-01-17 with total page 166 pages. Available in PDF, EPUB and Kindle. Book excerpt: Why does North Korea behave erratically in pursuing its nuclear weapons program? Why did the United States prefer bilateral alliances to multilateral ones in Asia after World War II? Why did China become "nice"—no more military coercion—in dealing with the pro-independence Taiwan President Chen Shuibian after 2000? Why did China compromise in the negotiation of the Chunxiao gas exploration in 2008 while Japan became provocative later in the Sino-Japanese disputes in the East China Sea? North Korea’s nuclear behavior, U.S. alliance strategy, China’s Taiwan policy, and Sino-Japanese territorial disputes are all important examples of seemingly irrational foreign policy decisions that have determined regional stability and Asian security. By examining major events in Asian security, this book investigates why and how leaders make risky and seemingly irrational decisions in international politics. The authors take the innovative step of integrating the neoclassical realist framework in political science and prospect theory in psychology. Their analysis suggests that political leaders are more likely to take risky actions when their vital interests and political legitimacy are seriously threatened. For each case, the authors first discuss the weaknesses of some of the prevailing arguments, mainly from rationalist and constructivist theorizing, and then offer an alternative explanation based on their political legitimacy-prospect theory model. This pioneering book tests and expands prospect theory to the study of Asian security and challenges traditional, expected-utility-based, rationalist theories of foreign policy behavior.

Avoiding Losses/taking Risks

Author : Barbara Farnham
Publisher : University of Michigan Press
ISBN 13 : 9780472082766
Total Pages : 180 pages
Book Rating : 4.0/5 (827 download)

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Book Synopsis Avoiding Losses/taking Risks by : Barbara Farnham

Download or read book Avoiding Losses/taking Risks written by Barbara Farnham and published by University of Michigan Press. This book was released on 1994 with total page 180 pages. Available in PDF, EPUB and Kindle. Book excerpt: The impact of prospect theory on international relations theory

The Capital Asset Pricing Model in the 21st Century

Author : Haim Levy
Publisher : Cambridge University Press
ISBN 13 : 1139503022
Total Pages : 457 pages
Book Rating : 4.1/5 (395 download)

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Book Synopsis The Capital Asset Pricing Model in the 21st Century by : Haim Levy

Download or read book The Capital Asset Pricing Model in the 21st Century written by Haim Levy and published by Cambridge University Press. This book was released on 2011-10-30 with total page 457 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Capital Asset Pricing Model (CAPM) and the mean-variance (M-V) rule, which are based on classic expected utility theory, have been heavily criticized theoretically and empirically. The advent of behavioral economics, prospect theory and other psychology-minded approaches in finance challenges the rational investor model from which CAPM and M-V derive. Haim Levy argues that the tension between the classic financial models and behavioral economics approaches is more apparent than real. This book aims to relax the tension between the two paradigms. Specifically, Professor Levy shows that although behavioral economics contradicts aspects of expected utility theory, CAPM and M-V are intact in both expected utility theory and cumulative prospect theory frameworks. There is furthermore no evidence to reject CAPM empirically when ex-ante parameters are employed. Professionals may thus comfortably teach and use CAPM and behavioral economics or cumulative prospect theory as coexisting paradigms.

Thinking, Fast and Slow

Author : Daniel Kahneman
Publisher : Farrar, Straus and Giroux
ISBN 13 : 1429969350
Total Pages : 511 pages
Book Rating : 4.4/5 (299 download)

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Book Synopsis Thinking, Fast and Slow by : Daniel Kahneman

Download or read book Thinking, Fast and Slow written by Daniel Kahneman and published by Farrar, Straus and Giroux. This book was released on 2011-10-25 with total page 511 pages. Available in PDF, EPUB and Kindle. Book excerpt: Major New York Times bestseller Winner of the National Academy of Sciences Best Book Award in 2012 Selected by the New York Times Book Review as one of the ten best books of 2011 A Globe and Mail Best Books of the Year 2011 Title One of The Economist's 2011 Books of the Year One of The Wall Street Journal's Best Nonfiction Books of the Year 2011 2013 Presidential Medal of Freedom Recipient Kahneman's work with Amos Tversky is the subject of Michael Lewis's The Undoing Project: A Friendship That Changed Our Minds In his mega bestseller, Thinking, Fast and Slow, Daniel Kahneman, the renowned psychologist and winner of the Nobel Prize in Economics, takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical. The impact of overconfidence on corporate strategies, the difficulties of predicting what will make us happy in the future, the profound effect of cognitive biases on everything from playing the stock market to planning our next vacation—each of these can be understood only by knowing how the two systems shape our judgments and decisions. Engaging the reader in a lively conversation about how we think, Kahneman reveals where we can and cannot trust our intuitions and how we can tap into the benefits of slow thinking. He offers practical and enlightening insights into how choices are made in both our business and our personal lives—and how we can use different techniques to guard against the mental glitches that often get us into trouble. Winner of the National Academy of Sciences Best Book Award and the Los Angeles Times Book Prize and selected by The New York Times Book Review as one of the ten best books of 2011, Thinking, Fast and Slow is destined to be a classic.

Decision, Probability and Utility

Author : Peter Gärdenfors
Publisher : Cambridge University Press
ISBN 13 : 9780521336581
Total Pages : 464 pages
Book Rating : 4.3/5 (365 download)

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Book Synopsis Decision, Probability and Utility by : Peter Gärdenfors

Download or read book Decision, Probability and Utility written by Peter Gärdenfors and published by Cambridge University Press. This book was released on 1988-04-29 with total page 464 pages. Available in PDF, EPUB and Kindle. Book excerpt: Decision theory and the theory of rational choice have recently been the subjects of considerable research by philosophers and economists. However, no adequate anthology exists which can be used to introduce students to the field. This volume is designed to meet that need. The essays included are organized into five parts covering the foundations of decision theory, the conceptualization of probability and utility, pholosophical difficulties with the rules of rationality and with the assessment of probability, and causal decision theory. The editors provide an extensive introduction to the field and introductions to each part.

Behavioral Risk Management

Author : Hersh Shefrin
Publisher : Springer
ISBN 13 : 1137445629
Total Pages : 518 pages
Book Rating : 4.1/5 (374 download)

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Book Synopsis Behavioral Risk Management by : Hersh Shefrin

Download or read book Behavioral Risk Management written by Hersh Shefrin and published by Springer. This book was released on 2016-04-29 with total page 518 pages. Available in PDF, EPUB and Kindle. Book excerpt: The psychological dimension of managing risk is of crucial importance, and its study has led to the identification of specific do's and don'ts. Those with an understanding of the psychology underlying risk and the skills to recognize its manifestation in practice, have the opportunity to develop frameworks that embody the do's and don'ts, thereby producing sound judgments and good decisions. Those lacking the understanding and the skills are destined to be more hit and miss in their approach to risk management, doing the don'ts and not doing the do's. Virtually every major risk management catastrophe in the last fifteen years has psychological pitfalls at its root. The list of catastrophes includes the 2008 bankruptcy of Lehman Brothers and subsequent global financial crisis, the 2010 explosion at BP's Macondo well in the Gulf of Mexico and the 2011 nuclear meltdown at the Fukushima Daiichi power plant. A critical lesson from psychological studies for those involved in risk management is that people's judgments and decisions about risk vary with type of circumstance. In Behavioral Risk Management readers will learn that there are specific actions that organizations can undertake to incorporate understanding, recognition, and behavioral interventions into the practice of risk management. There are many examples throughout the book that illustrate doing the don'ts. The chapters in the first part of the book introduce the main ideas, and the chapters in the latter part provide insight into how to apply those ideas to the practical world in which risk managers operate.

Neuroeconomics

Author : Paul W. Glimcher
Publisher : Academic Press
ISBN 13 : 0123914698
Total Pages : 560 pages
Book Rating : 4.1/5 (239 download)

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Book Synopsis Neuroeconomics by : Paul W. Glimcher

Download or read book Neuroeconomics written by Paul W. Glimcher and published by Academic Press. This book was released on 2013-08-13 with total page 560 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the years since it first published, Neuroeconomics: Decision Making and the Brain has become the standard reference and textbook in the burgeoning field of neuroeconomics. The second edition, a nearly complete revision of this landmark book, will set a new standard. This new edition features five sections designed to serve as both classroom-friendly introductions to each of the major subareas in neuroeconomics, and as advanced synopses of all that has been accomplished in the last two decades in this rapidly expanding academic discipline. The first of these sections provides useful introductions to the disciplines of microeconomics, the psychology of judgment and decision, computational neuroscience, and anthropology for scholars and students seeking interdisciplinary breadth. The second section provides an overview of how human and animal preferences are represented in the mammalian nervous systems. Chapters on risk, time preferences, social preferences, emotion, pharmacology, and common neural currencies—each written by leading experts—lay out the foundations of neuroeconomic thought. The third section contains both overview and in-depth chapters on the fundamentals of reinforcement learning, value learning, and value representation. The fourth section, “The Neural Mechanisms for Choice, integrates what is known about the decision-making architecture into state-of-the-art models of how we make choices. The final section embeds these mechanisms in a larger social context, showing how these mechanisms function during social decision-making in both humans and animals. The book provides a historically rich exposition in each of its chapters and emphasizes both the accomplishments and the controversies in the field. A clear explanatory style and a single expository voice characterize all chapters, making core issues in economics, psychology, and neuroscience accessible to scholars from all disciplines. The volume is essential reading for anyone interested in neuroeconomics in particular or decision making in general. Editors and contributing authors are among the acknowledged experts and founders in the field, making this the authoritative reference for neuroeconomics Suitable as an advanced undergraduate or graduate textbook as well as a thorough reference for active researchers Introductory chapters on economics, psychology, neuroscience, and anthropology provide students and scholars from any discipline with the keys to understanding this interdisciplinary field Detailed chapters on subjects that include reinforcement learning, risk, inter-temporal choice, drift-diffusion models, game theory, and prospect theory make this an invaluable reference Published in association with the Society for Neuroeconomics—www.neuroeconomics.org Full-color presentation throughout with numerous carefully selected illustrations to highlight key concepts

Behavioral Decision Theory

Author : Kazuhisa Takemura
Publisher : Springer Nature
ISBN 13 : 9811654530
Total Pages : 389 pages
Book Rating : 4.8/5 (116 download)

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Book Synopsis Behavioral Decision Theory by : Kazuhisa Takemura

Download or read book Behavioral Decision Theory written by Kazuhisa Takemura and published by Springer Nature. This book was released on 2021-09-29 with total page 389 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is the second edition of Behavioral Decision Theory, published in 2014. The main approach and structure of this book have been retained in the new edition. However, this second edition provides a fresh overview of the idea of behavioral decision theory and related research findings such as theoretical and empirical discoveries of preference formation, time discounting, social interaction, and social decision making. The book covers a wide range from classical to relatively recent major studies concerning behavioral decision theory, which, in brief, is a general term for descriptive theories to explain the psychological knowledge related to people’s decision-making behavior. It is called a theory but is actually a combination of various psychological theories, for which no axiomatic systems—such as those associated with the utility theory widely used in economics—have been established. The utility theory is often limited to qualitative knowledge; however, as the studies of Nobel laureates H. A. Simon, D. Kahneman, and R. Thaler have suggested, the psychological methodology and knowledge of behavioral decision theory have been applied widely in such fields as economics, business administration, and engineering and are expected to become even more useful in the future. Research into people’s decision making represents an important part in those fields, various aspects of which overlap with the scope of behavioral decision theory. This theory is closely related to behavioral economics and behavioral finance, which have come into greater use in recent years. This book will appeal especially to graduate students, advanced undergraduate students, and researchers who are interested in decision-making phenomena.

Painful Choices

Author : David A. Welch
Publisher : Princeton University Press
ISBN 13 : 1400840740
Total Pages : 289 pages
Book Rating : 4.4/5 (8 download)

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Book Synopsis Painful Choices by : David A. Welch

Download or read book Painful Choices written by David A. Welch and published by Princeton University Press. This book was released on 2011-06-27 with total page 289 pages. Available in PDF, EPUB and Kindle. Book excerpt: Under what conditions should we expect states to do things radically differently all of a sudden? In this book, David Welch seeks to answer this question, constructing a theory of foreign policy change inspired by organization theory, cognitive and motivational psychology, and prospect theory. He then "test drives" the theory in a series of comparative case studies in the security and trade domains: Argentina's decision to go to war over the Falklands/Malvinas vs. Japan's endless patience with diplomacy in its conflict with Russia over the Northern Territories; America's decision to commit large-scale military force to Vietnam vs. its ultimate decision to withdraw; and Canada's two abortive flirtations with free trade with the United States in 1911 and 1948 vs. its embrace of free trade in the late 1980s. Painful Choices has three main objectives: to determine whether the general theory project in the field of international relations can be redeemed, given disappointment with previous attempts; to reflect on what this reveals about the possibilities and limits of general theory; and to inform policy. Welch argues that earlier efforts at general theory erred by aiming to explain state behavior, which is an intractable problem. Instead, since inertia is the default expectation in international politics, all we need do is to explain changes in behavior. Painful Choices shows that this is a tractable problem with clear implications for intelligence analysts and negotiators.

Behavioral Economics For Dummies

Author : Morris Altman
Publisher : John Wiley & Sons
ISBN 13 : 1118085035
Total Pages : 384 pages
Book Rating : 4.1/5 (18 download)

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Book Synopsis Behavioral Economics For Dummies by : Morris Altman

Download or read book Behavioral Economics For Dummies written by Morris Altman and published by John Wiley & Sons. This book was released on 2012-02-28 with total page 384 pages. Available in PDF, EPUB and Kindle. Book excerpt: A guide to the study of how and why you really make financial decisions While classical economics is based on the notion that people act with rational self-interest, many key money decisions—like splurging on an expensive watch—can seem far from rational. The field of behavioral economics sheds light on the many subtle and not-so-subtle factors that contribute to our financial and purchasing choices. And in Behavioral Economics For Dummies, readers will learn how social and psychological factors, such as instinctual behavior patterns, social pressure, and mental framing, can dramatically affect our day-to-day decision-making and financial choices. Based on psychology and rooted in real-world examples, Behavioral Economics For Dummies offers the sort of insights designed to help investors avoid impulsive mistakes, companies understand the mechanisms behind individual choices, and governments and nonprofits make public decisions. A friendly introduction to the study of how and why people really make financial decisions The author is a professor of behavioral and institutional economics at Victoria University An essential component to improving your financial decision-making (and even to understanding current events), Behavioral Economics For Dummies is important for just about anyone who has a bank account and is interested in why—and when—they spend money.

An Introduction to Algorithmic Trading

Author : Edward Leshik
Publisher : John Wiley & Sons
ISBN 13 : 1119975093
Total Pages : 273 pages
Book Rating : 4.1/5 (199 download)

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Book Synopsis An Introduction to Algorithmic Trading by : Edward Leshik

Download or read book An Introduction to Algorithmic Trading written by Edward Leshik and published by John Wiley & Sons. This book was released on 2011-09-19 with total page 273 pages. Available in PDF, EPUB and Kindle. Book excerpt: Interest in algorithmic trading is growing massively – it’s cheaper, faster and better to control than standard trading, it enables you to ‘pre-think’ the market, executing complex math in real time and take the required decisions based on the strategy defined. We are no longer limited by human ‘bandwidth’. The cost alone (estimated at 6 cents per share manual, 1 cent per share algorithmic) is a sufficient driver to power the growth of the industry. According to consultant firm, Aite Group LLC, high frequency trading firms alone account for 73% of all US equity trading volume, despite only representing approximately 2% of the total firms operating in the US markets. Algorithmic trading is becoming the industry lifeblood. But it is a secretive industry with few willing to share the secrets of their success. The book begins with a step-by-step guide to algorithmic trading, demystifying this complex subject and providing readers with a specific and usable algorithmic trading knowledge. It provides background information leading to more advanced work by outlining the current trading algorithms, the basics of their design, what they are, how they work, how they are used, their strengths, their weaknesses, where we are now and where we are going. The book then goes on to demonstrate a selection of detailed algorithms including their implementation in the markets. Using actual algorithms that have been used in live trading readers have access to real time trading functionality and can use the never before seen algorithms to trade their own accounts. The markets are complex adaptive systems exhibiting unpredictable behaviour. As the markets evolve algorithmic designers need to be constantly aware of any changes that may impact their work, so for the more adventurous reader there is also a section on how to design trading algorithms. All examples and algorithms are demonstrated in Excel on the accompanying CD ROM, including actual algorithmic examples which have been used in live trading.

Advances in Behavioral Economics

Author : Colin F. Camerer
Publisher : Princeton University Press
ISBN 13 : 1400829119
Total Pages : 769 pages
Book Rating : 4.4/5 (8 download)

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Book Synopsis Advances in Behavioral Economics by : Colin F. Camerer

Download or read book Advances in Behavioral Economics written by Colin F. Camerer and published by Princeton University Press. This book was released on 2011-12-12 with total page 769 pages. Available in PDF, EPUB and Kindle. Book excerpt: Twenty years ago, behavioral economics did not exist as a field. Most economists were deeply skeptical--even antagonistic--toward the idea of importing insights from psychology into their field. Today, behavioral economics has become virtually mainstream. It is well represented in prominent journals and top economics departments, and behavioral economists, including several contributors to this volume, have garnered some of the most prestigious awards in the profession. This book assembles the most important papers on behavioral economics published since around 1990. Among the 25 articles are many that update and extend earlier foundational contributions, as well as cutting-edge papers that break new theoretical and empirical ground. Advances in Behavioral Economics will serve as the definitive one-volume resource for those who want to familiarize themselves with the new field or keep up-to-date with the latest developments. It will not only be a core text for students, but will be consulted widely by professional economists, as well as psychologists and social scientists with an interest in how behavioral insights are being applied in economics. The articles, which follow Colin Camerer and George Loewenstein's introduction, are by the editors, George A. Akerlof, Linda Babcock, Shlomo Benartzi, Vincent P. Crawford, Peter Diamond, Ernst Fehr, Robert H. Frank, Shane Frederick, Simon Gächter, David Genesove, Itzhak Gilboa, Uri Gneezy, Robert M. Hutchens, Daniel Kahneman, Jack L. Knetsch, David Laibson, Christopher Mayer, Terrance Odean, Ted O'Donoghue, Aldo Rustichini, David Schmeidler, Klaus M. Schmidt, Eldar Shafir, Hersh M. Shefrin, Chris Starmer, Richard H. Thaler, Amos Tversky, and Janet L. Yellen.