On complementary symmetry and reference dependence

• Autorzy: Michał Lewandowski , Łukasz Woźny
• Języki publikacji: EN

Abstrakty

EN

This paper reevaluates the complementary symmetry hypothesis and the supporting experimental evidence. Originally the hypothesis was stated for binary risky prospects. We generalize the hypothesis to arbitrary state-contingent real-valued acts, thus extending the domain from risk to uncertainty/ambiguity and allowing for multiple outcomes. Existing experiments tested the hypothesis using selling and buying prices and found systematic violations. We argue that in order to be consistent with the hypothesis one should replace selling with short-selling. We thus define a new elicitation task and run an experiment to test our conjecture. We replicate previously observed violations in the old setting and find strong support for the hypothesis in the new setting. In addition, our results shed new light on the validity of various reference point setting rules. (original abstract)

Słowa kluczowe

EN

Relationship of risk and uncertainty in investments; Risk assessment models; Prospect theory

PL

Związek ryzyka i niepewności w inwestycjach; Modele oceny ryzyka; Teoria perspektywy

• Czasopismo: Collegium of Economic Analysis SGH - Working Papers
• Rocznik: 2020
• Numer: nr 59
• Strony: 14

Twórcy

autor

Michał Lewandowski

• Warsaw School of Economics, Poland

autor

Łukasz Woźny

• Warsaw School of Economics, Poland

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