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Title: INVESTIGATING THE LEDDO, JAYANTI AND DUAN (2019) REVISED PROSPECT THEORY VALUE FUNCTION WITH CHINESE STUDENTS
Authors: Yiting Gu and John Leddo
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Yiting Gu and John Leddo MyEdMaster, LLC John Leddo is the director of research at MyEdMaster, LLC.
MLA 8 Gu, Yiting, and John Leddo. "INVESTIGATING THE LEDDO, JAYANTI AND DUAN (2019) REVISED PROSPECT THEORY VALUE FUNCTION WITH CHINESE STUDENTS." Int. j. of Social Science and Economic Research, vol. 7, no. 6, June 2022, pp. 1618-1631, doi.org/10.46609/IJSSER.2022.v07i06.011. Accessed June 2022. APA 6 Gu, Y., & Leddo, J. (2022, June). INVESTIGATING THE LEDDO, JAYANTI AND DUAN (2019) REVISED PROSPECT THEORY VALUE FUNCTION WITH CHINESE STUDENTS. Int. j. of Social Science and Economic Research, 7(6), 1618-1631. Retrieved from https://doi.org/10.46609/IJSSER.2022.v07i06.011 Chicago Gu, Yiting, and John Leddo. "INVESTIGATING THE LEDDO, JAYANTI AND DUAN (2019) REVISED PROSPECT THEORY VALUE FUNCTION WITH CHINESE STUDENTS." Int. j. of Social Science and Economic Research 7, no. 6 (June 2022), 1618-1631. Accessed June, 2022. https://doi.org/10.46609/IJSSER.2022.v07i06.011.
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ABSTRACT: Prospect Theory (Kahneman and Tversky, 1979) is a highly influential theory that predicts decision making when people are confronted with choices involving gains or losses with different degrees of uncertainty. Prospect Theory argues that people are generally risk averse when it comes to seeking gains and risk seeking when it comes to seeking losses. Leddo et al. (2019) noted that the original formalization of Prospect Theory did not take into account people’s goals. They argued that people would be willing to take risks to achieve goals but become more risk averse once those goals are achieved, and they would become risk averse when confronted with losses in order to avoid a highly negative outcome but become more risk seeking to negate the negative outcome once the highly negative outcome occurred. Leddo et al.’s research confirmed this hypothesis, leading to a revision of Prospect Theory’s value function. The present research investigates whether the same revised value function can predict decisions made by people in other cultures. Accordingly, the present paper replicated the Leddo and Shukla (2020) study that examined choice of standardized tests in high school students. In the present study 44 high school students in China, a large economy with a different economic system than the US where previous research suggests students are more risk averse, were given the Leddo and Shukla (2020) scenarios involving gains and losses. Results showed that students chose the less risky alternative in all scenarios except in cases involving losses where an avoidance level had already been met, in which case, almost all students chose the risky alternative. These results were not consistent with those predicted by the Leddo et al. (2019) revised Prospect Theory value function for gains but were consistent with those predicted for losses.

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