Prospect theory
by Peter P. Wakker · first published 2010
3mentions
1recommended by
2HN commenters
2017–2022first – last mentioned
50% recommend50% neutral
"Prospect Theory: For Risk and Ambiguity provides the first 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
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…Dartnell The Knowledge: This book made me realize the fragility of modern technology and how it is funded on chemical industry, shipping, oil, and the exploitation of natural resources. - Peter P. Wakker Prospect Theory: This is not an easy reading but it contains one of the few understandable and detailed explanations of rank-dependent utility theory and why early probability-weighing approaches were incorrect; a must…
on “Ask HN: Which books you have read till now that were worth investing time in?” ↗…plausibilities. By the way, Expected Utility falls prey to Dutch Books. There is a money pump against every risk-averse or risk-seeking agent. Check out Wakker's book, which is much better than Jayne: Prospect Theory for risk and ambiguity. Anyway, EU is often considered rational and widely used, but according to your criterion it would be irrational. (In finance, the kind of Dutch Books are called "arbitrage" and…
on “Interview on ”Bayesian Statistics the Fun Way”” ↗…probability to an outcome. Paradoxes by Elsberg and Allais have shown that this is actually an important decision problem in real life. Multiple approaches exist to generalize Decision Theory, such as Prospect Theory, MinMax Preferences, integration by capacities as opposed to measures. Schmeidler, Gilboa and Wakker are some names. Game Theory exists in this space as well. 3. Evolutionary Game Theory: The idea…
on “Game Theory: Open Access textbook” ↗