A testing method of probability weighting functions from an axiomatic perspective

Kazuhisa Takemura; Hajime Murakami

doi:10.3389/fams.2018.00048

A testing method of probability weighting functions from an axiomatic perspective

Kazuhisa Takemura, Hajime Murakami

School of Humanities and Social Sciences

Research output: Contribution to journal › Article › peer-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 language	English
Article number	48
Pages (from-to)	1-8
Number of pages	8
Journal	Frontiers in Applied Mathematics and Statistics
Volume	4
DOIs	https://doi.org/10.3389/fams.2018.00048
Publication status	Published - 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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AB - 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.

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A testing method of probability weighting functions from an axiomatic perspective

Abstract

Keywords

ASJC Scopus subject areas

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