Research Seminar by Serge Blondel (University of Angers)

On Tuesday, November 24 at 4.40 pm  International College of Economics and Finance held the Research Seminar.
Speaker: Serge Blondel (University of Angers)
Theme: "Prospect Theory: Where is the Reference Point?"

Abstract: This new experiment suggests that there is no endowment effect in a case of choosing between lotteries, even if the subjects start with one of the options. The subjects seem to anticipate and integrate into their reference point (RP) the potential wealth increase. By assuming that the RP could be a lottery, third-generation prospect theory explains the disparity between selling and buying prices and the preference reversal (PR) phenomenon. However, identifying the RP in the case of a choice requires further investigation because zero appears too low. Assuming that the RP is a compounded lottery (equal chance of having both lotteries) appears as a worthwhile precision of the RP in prospect theory, consistent with PR.

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