Abstract
The Prospect Theory as proposed by Kahneman and Tversky (1979) has emerged as a widely accepted theory of decision-making, thanks largely to the persistence of observed anomalies in the trading of financial products – specifically, the existence of an unusually large premium on equities, and the tendency to hold on to losing investments (disposition effect). Questions about the true nature and extent of reference-dependent loss aversion as manifested by these phenomena, however, remain. In particular, for countries like the Philippines with relatively shallow capital markets, there is a need to reconcile financial education and advice with the reality of systematically irrational investor sentiment to facilitate greater financial market participation.
Recommended Citation
Mutuc, Paulo Jose M.
(2010)
"Prospect Theory and the Financial Markets: A Review,"
DLSU Business & Economics Review: Vol. 20:
No.
1, Article 8.
DOI: https://doi.org/10.59588/2243-786X.1337
Available at:
https://animorepository.dlsu.edu.ph/ber/vol20/iss1/8
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