Article ID Journal Published Year Pages File Type
5061654 Economics Letters 2009 6 Pages PDF
Abstract
Loewenstein and Prelec (1992) explain the 'magnitude effect' and the 'sign effect', respectively, by using increasing elasticity of the value function and a higher elasticity for losses as compared to gains. We provide a value function with these two properties.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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A value function that explains the magnitude and sign effects
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