AM2L08 Prospect Theory

This lecture shows how Prospect Theory explains phenomenon which puzzles economists. The real puzzle is: WHY do economists CONTINUE to teach Expected Utility, when a superior model is available? The answer lies in their committment to RATIONAL behavior. But WHY are they committed to rational behavior so much so that ALL evidence to the contrary is ignored? Answering this one is more difficult.

Stocks Versus Bonds: A Visual Re-Cap - Graphs to explain Equity-Premium Puzzle.

Kahneman Nobel Prize Lecture - Bounded Rationality and Prospect Theory

AM2L08 Prospect Theory in the Wild - Colin Camerer's paper on real world applications, 1hr 15m video lecture