%0 Report
        %A Rablen, Matthew D.
        %T Foundations of the Rank-Dependent Probability Weighting Function
        %D 2019
        %8 2019 Oct
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 12701
        %U https://www.iza.org/index.php/publications/dp12701
        %X The psychological basis for rank-dependent probability weighting, and for an inverse-S probability weighting function (PWF) in particular, has often been questioned. I examine the existence and shape of the PWF in a model allowing for optimism/pessimism over probability distributions and for loss averse/gain loving stochastic reference dependence. I give commonly observed shapes of PWF a psychological interpretation. In particular, I establish a deep connection between two of the most established phenomena in decisionmaking: loss aversion and the inverse-S PWF: the former is a pre- condition for the latter.
        %K probability weighting
%K rank dependent expected utility
%K loss aversion
%K reference dependence
%K optimism
%K pessimism