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On the potential for observational equivalence in experiments on risky choice when a power utility function is assumed

Research output: Contribution to Journal/MagazineJournal articlepeer-review

<mark>Journal publication date</mark>07/2012
<mark>Journal</mark>Economics Letters
Issue number1
Number of pages3
Pages (from-to)8-10
Publication StatusPublished
<mark>Original language</mark>English


We demonstrate theoretically and illustrate the implications of assuming power utility when the true function is of the expo-power form. Empirical results can appear to be consistent with cumulative prospect theory when they are in fact generated from a Markowitz model.