Reflecting on reflection: prospect theory, our behaviors, and our environment

Oliver, Adam (2024) Reflecting on reflection: prospect theory, our behaviors, and our environment. Behavioural Public Policy, 8 (1). 173 - 183. ISSN 2398-063X

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Abstract

In a previously published article, I reported some tests of prospect theory's reflection effect over outcomes defined by money and life years gained from treatment. Those results suggested qualified support for the reflection effect over money outcomes and strong support over longevity outcomes. This article reruns those tests while accounting for the intensity of individual risk attitudes, and, overall, show consistency with the reflection effect. However, I argue that these results do not necessarily offer support for the explanatory power of prospect theory. Rather, the results may be driven by evolved responses to circumstances that provoke perceptions of scarcity and abundance. Therefore, from an ecological perspective, behavioral patterns such as those that are consistent with the reflection effect, which, by extension, tend to be considered as erroneous or biased by most behavioral economists because they conflict with the postulates of rational choice theory, may not be unreasonable. Recognizing as such is important when considering how behavioral insights ought to inform public policy design and implementation.

Item Type:	Article
Official URL:	https://www.cambridge.org/core/journals/behavioura...
Additional Information:	© 2021 The Author(s)
Divisions:	Social Policy
Subjects:	B Philosophy. Psychology. Religion > BF Psychology H Social Sciences > HM Sociology
JEL classification:	B - Schools of Economic Thought and Methodology > B2 - History of Economic Thought since 1925 > B21 - Microeconomics C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods: General > C12 - Hypothesis Testing C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior
Date Deposited:	24 Jun 2024 23:13
Last Modified:	14 Sep 2024 10:09
URI:	http://eprints.lse.ac.uk/id/eprint/123966

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