Abstract
Bernheim and Sprenger (2020, Econometrica; SB) claimed to experimentally falsify rank dependence in prospect theory. This paper criticizes SB's results and novelty claims. Their experiments only captured well-known heuristics and not genuine preferences. Many falsifications of rank dependence have been made before, and SB's equalizing reductions have also been used before. SB thought to identify probability weighting and utility where they are unidentifiable, invalidating all SB's related claims. SB used an incorrect formula of original prospect theory. Their suggested alternative of rank-independent probability weighting with dependence on the number of outcomes (their “complexity aversion;” a misnomer) has long been discarded.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
