A Nonparametric Test for Cumulative Prospect Theory

Last registered on June 20, 2025
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Pre-Trial

Trial Information

General Information

Title
A Nonparametric Test for Cumulative Prospect Theory
RCT ID
AEARCTR-0015722
Initial registration date
June 18, 2025

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
June 20, 2025, 11:43 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
United Kingdom of Great Britain and Northern Ireland
Region
Country
United States of America
Region

Primary Investigator

Name
Songyu He
Affiliation
Royal Holloway, University of London
Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status
In development
Start date
2025-06-18
End date
2025-07-01
Keywords
Behavior
Additional Keywords
JEL code(s)
D90
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
As a leading non-expected utility model, Cumulative Prospect Theory (CPT) (Tversky and Kahneman, 1992) rationalizes a wide range of deviations from expected utility theory while keeping most of its theoretical axioms. This project proposes an experiment to jointly analyze and test the two major factors in CPT: probability weighting function and rank dependence. Specifically, under a nonparametric framework, we test the validity of rank dependence and estimate the first-order derivative of probability weighting functions.
External Link(s)

Registration Citation

Citation
He, Songyu. 2025. "A Nonparametric Test for Cumulative Prospect Theory." AEA RCT Registry. June 20. https://doi.org/10.1257/rct.15722-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Our experiment has two treatments – gain and loss treatment. Every subject only participates in a single treatment. In the gain treatment, subjects chooses among monetary lotteries. In contrast, in the lost treatment, subjects chooses among lotteries with outcomes being potential workloads they need to complete at the end of the experiment. Each treatment contains nineteen multiple price lists (Holt and Laury, 2002), which can be divided into two parts: (p,Z) lists and (q,X) lists. In each treatment, there are ten (p,Z) lists and nine (q,X) lists. The experimental interface is programmed using oTree (Chen et al., 2016).
Intervention (Hidden)
Intervention Start Date
2025-06-18
Intervention End Date
2025-06-30

Primary Outcomes

Primary Outcomes (end points)
The primary outcomes are the nineteen choices of subjects for each price list. Each choice indicates a pair of lotteries that are indifferent to the subjects.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
This experiments recruit 550 subjects (275 male and 275 female) from Prolific with the following inclusion criteria: Inclusion criteria:
Approval rate ≥ 98%. Fluent in English. Located in US or UK. Minimum high school education. Age 18–50.
Participants will be excluded from analysis if: their choices lead to 3 or more first-order stochastic dominance (FOSD) violations.
They have 7 or more total mistakes in three comprehension questions (the order of answers in questions are randomized)
Experimental Design Details
Randomization Method
Randomization done by computer.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
550 individual
Sample size: planned number of observations
550 individual
Sample size (or number of clusters) by treatment arms
275 in gain treatment. 275 in loss treatment.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Cohen's f around 0.09.
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Royal Holloway, University of London
IRB Approval Date
2025-03-19
IRB Approval Number
632
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials