Prospect Theory: An Analysis of Decision under Risk
1979 · paper · Economics
Critiques expected utility theory as a description of choices under risk and proposes prospect theory, where value attaches to gains and losses and probabilities become decision weights. Reports effects such as the certainty effect and isolation effect that violate utility theory.
Checked: PDF from web.mit.edu, fetched 5 Oct 2026. Page numbers are those of that PDF.
2 findings
Substance Page 266 reports that '(61 per cent) made the modal choice in both problems'. With 82% choosing B in Problem 1 and 83% choosing C in Problem 2 (both N=72), at least 65% must have made both modal choices.
- p. 4 Text after Problem 2
a majority of respondents (61 per cent) made the modal choice in both problems
- p. 3 Problem 1
N=72 [18] [82]*
Only the authors can say what is right here.
Judge's note: Checked Problem 1 (N=72, [82]*) on p.265 and Problem 2 (N=72, [83]*) on p.266. The text's 'analysis of individual patterns of choice' indicates the same respondents answered both problems. No statement in the paper explains a different analysis set for the 61%, and rounding cannot close the gap. Only the authors can say which figure is wrong.
Second check: another model agreed
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Reference or label Reference [25] lists 'D. R. LUCE'; the co-author of Foundations of Measurement is R. D. (R. Duncan) Luce.
- p. 29 Reference [25]
KRANTZ, D. H., D. R. LUCE, P. SUPPES
- p. 29 Reference [25]
D. R. LUCE
Only the authors can say what is right here.
Judge's note: Rests on outside knowledge: Luce's initials are R. D. The page prints 'D. R. LUCE'.
Second check: another model agreed
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11 minor (typos and the like; most checked by the judge only)
Wording The proof prints 'V(x, p; y, 1−p) = 0 iff π(p)v(x) = −π(1−p)v(−y)'; the left side should be V(x, p; −y, 1−p), matching the proposition's prospect (x, p; −y, 1−p).
- p. 25 Shifts of Reference, first line of proof
V(x, p; y, 1 -p) = 0 iff nr(p)v(x) = -X(1 -p)v(-y)
- p. 25 Proof under Shifts of Reference
V(x, p; y, 1 -p) = 0
Judge's note: The image of p.287 shows 'y' without a minus inside V, while '−y' appears in the proposition and on the right-hand side of the same line. This is a notational slip; the intended meaning is evident from context.
Second check: another model agreed
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Wording The Appendix describes the weak preference relation ≥ as 'connected, symmetric and transitive'. A connected, symmetric ≥ would make all prospects indifferent; presumably 'reflexive' (or a similar property) was intended.
- p. 27 Appendix, second paragraph
prospects that is assumed to be connected, symmetric and transitive
- p. 27 Appendix, para 2
assumed to be connected, symmetric and transitive
Only the authors can say what is right here.
Judge's note: The image of p.289 shows ≥ denotes the preference relation, with ≈ the derived indifference relation. Symmetry is inconsistent with ≥ being a preference order. Only the authors can confirm the intended term.
Second check: another model agreed
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Typo Stray full stop mid-sentence: 'from both prospects. under consideration.'
- p. 4 Text after Problem 2
prospects. under consideration
- p. 4 paragraph after Problem 2
from both prospects. under consideration.
Judge's note: A dot is visible after 'prospects' in the page image. It is small and may be a print speck, but it appears in both the image and the text layer.
Second check: none (judge only)
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Typo Problem 12 prints '[69*]', with the asterisk inside the bracket; everywhere else the asterisk follows the bracket, e.g. '[84]*'.
- p. 11 Problem 12 response line
N = 68 [69*] [31]
- p. 11 Problem 12
[69*]
Judge's note: Visible on p.273. Cosmetic inconsistency only; the meaning is unchanged.
Second check: none (judge only)
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Typo 'a wealth of $100, 000' has a space after the comma; the same paragraph elsewhere writes '$100,000'.
- p. 11 paragraph after Problems 11 and 12
a wealth of $100, 000, regardless
Judge's note: The space is visible in the image of p.273.
Second check: none (judge only)
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Typo Stray period in 'will be reduced to (200, .50). and evaluated in this form.'
- p. 12 Editing phase, 'Combination'
will be reduced to (200, .50). and evaluated in this form.
Judge's note: The period before 'and' is visible on p.274.
Second check: none (judge only)
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Typo Misspelling: 'in order to accomodate the effects' should read 'accommodate'.
- p. 15 second paragraph
in order to accomodate the effects described
- p. 15 Para 2
in order to accomodate the effects
- p. 15 paragraph beginning 'The equations of prospect theory retain...'
in order to accomodate the effects described in
Judge's note: The misspelling is visible on p.277.
Second check: none (judge only)
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Typo p.18, The Weighting Function: 'they should not be interpreted as measures of degree or belief' should read 'degree of belief'.
- p. 18 The Weighting Function, first paragraph
measures of degree or belief
Judge's note: The crop of p.18 shows 'degree or belief' as printed. It is a one-letter typo for the standard phrase 'degree of belief'.
Second check: none (judge only)
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Typo p.19: 'the typical preferences in any version of Allias' example' misspells the name, which should be 'Allais''.
- p. 19 last paragraph
any version of Allias' example
- p. 19
typical preferences in any version of Allias' example
Judge's note: The crop of p.19 shows 'Allias'' as printed. Every other occurrence in the text (lines 147, 148, 150, 191, 203, 1046, 1174 and others) spells it 'Allais'.
Second check: none (judge only)
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Typo Unbalanced bracket in '[1 − π(.66]v(2,400)'; it should read '[1 − π(.66)]v(2,400)'.
- p. 20 derivation from Problems 1 and 2
[1 - 7T(.66]v (2,400)
Judge's note: The missing ')' is confirmed in the image of p.282.
Second check: none (judge only)
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Typo Reference [16] prints 'From Bismark to Woodcock'; the standard spelling is 'Bismarck'.
- p. 28 Reference [16]
From Bismark to Woodcock
Only the authors can say what is right here.
Judge's note: Rests on outside knowledge: the published title of Fuchs (1976) spells the name 'Bismarck'. The page shows 'Bismark'.
Second check: none (judge only)