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Why is expected utility theory still far more widely used by economists than prospect theory?

Why is expected utility theory still far more widely used by economists than prospect theory?

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Answer #1

In utility theory , satisfaction of consumer is measured in Utils which is dependent on wealth where as in prospect theory , satisafaction is measured in value , which calculates gains or losses.

Utility theory successfully implemented the principle of transitivity and it was helpful in ranking the preference for two or more goods.

However, prospect theory lacks the concept of transitivity and economists are unable to rank the preferences of consumer .

Therefore,utility theory is widely used than prospect theory,

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