Replicating patterns of prospect theory for decision under risk.

Area of Science:

• Behavioral Science
• Decision Theory
• Cognitive Psychology

Background:

• Prospect theory is a cornerstone of behavioral science, explaining decision-making under risk.
• Kahneman and Tversky's 1979 study significantly impacted various fields by showing deviations from expected utility theory.
• Recent replication failures of canonical theories prompted a re-evaluation of prospect theory's empirical basis.

Purpose of the Study:

• To directly test the original methods of Kahneman and Tversky's 1979 prospect theory study.
• To assess the replicability of prospect theory's core tenets in a multinational context.
• To investigate cross-cultural variations and individual differences in decision-making under risk.

Main Methods:

• A multinational study involving 4,098 participants across 19 countries and 13 languages.
• Direct replication of original experimental methods, with adjustments only for currency.
• All participants responded to all experimental items to ensure comprehensive data collection.

Main Results:

• Prospect theory's empirical foundations were replicated for 94% of items, with minor attenuation.
• Twelve out of 13 theoretical contrasts within prospect theory demonstrated successful replication.
• High replication rates (100% in some countries) were observed, alongside significant cross-country heterogeneity.

Conclusions:

• The empirical foundations of prospect theory are robust and replicate reliably across diverse populations.
• Cross-country heterogeneity and intra-individual variation offer valuable insights for future theoretical development and practical applications.
• The study reaffirms prospect theory's validity as a framework for understanding decision-making under risk.