A testing method of probability weighting functions from an axiomatic perspective

Kazuhisa Takemura, Hajime Murakami

Research output: Contribution to journalArticlepeer-review

Abstract

This study presents a testing approach to examine various models of probability weighting functions that are considered nonlinear functions of probability in behavioral decision theory, such as prospect theory. Although there are several empirical psychometric tests to examine probability weighting functions, there is no concrete method to examine these functions’ axiomatic properties. We propose axiomatic properties and a testing method to examine the generalized hyperbolic logarithmic model, power model, and exponential power model of the probability weighting functions, and provide an illustrative example of the testing method.

Original languageEnglish
Article number48
Pages (from-to)1-8
Number of pages8
JournalFrontiers in Applied Mathematics and Statistics
Volume4
DOIs
Publication statusPublished - 2018

Keywords

  • Axiomatic approach
  • Decision under risk
  • Hyperbolic logarithmic discounting
  • Probability weighting function
  • Time discounting

ASJC Scopus subject areas

  • Applied Mathematics
  • Statistics and Probability

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