When Product Managers Gamble with Requirements: Attitudes to Value and Risk
REFSQ '09 Proceedings of the 15th International Working Conference on Requirements Engineering: Foundation for Software Quality
A Prospect Theory Model of Resource Allocation
Decision Analysis
The Silver Lining Effect: Formal Analysis and Experiments
Management Science
Valuing Money and Things: Why a $20 Item Can Be Worth More and Less Than $20
Management Science
Aspirational Preferences and Their Representation by Risk Measures
Management Science
Multiple attribute decision making considering aspiration-levels: A method based on prospect theory
Computers and Industrial Engineering
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We investigate a basic premise of prospect theory: that the valuation of gains and losses is separable. In prospect theory, gain-loss separability implies that a mixed gamble is valued by summing the valuations of the gain and loss portions of that gamble. Two experimental studies demonstrate a systematic violation of the double-matching axiom, an axiom that is necessary for gain-loss separability. We document a reversal between preferences for mixed gambles and the associated gain and loss gambles---mixed gamble A is preferred to mixed gamble B, but the gain and loss portions of B are preferred to the gain and loss portions of A. The observed choice patterns are consistent with a process in which individuals are less sensitive to probability differences when choosing among mixed gambles than when choosing among either gain or loss gambles.