IJSSER

Title: INVESTIGATING THE LEDDO, JAYANTI AND DUAN(2019) REVISED PROSPECT THEORY VALUE FUNCTION WITH NICARAGUAN STUDENTS
Authors: Ilayda Boucher and John Leddo
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Ilayda Boucher and John Leddo John Leddo is the director of research at MyEdMaster, LLC.
MLA 8 Leddo, John. "INVESTIGATING THE LEDDO, JAYANTI AND DUAN(2019) REVISED PROSPECT THEORY VALUE FUNCTION WITH NICARAGUAN STUDENTS." Int. j. of Social Science and Economic Research, vol. 7, no. 4, Apr. 2022, pp. 1141-1152, doi.org/10.46609/IJSSER.2022.v07i04.022. Accessed Apr. 2022. APA 6 Leddo, J. (2022, April). INVESTIGATING THE LEDDO, JAYANTI AND DUAN(2019) REVISED PROSPECT THEORY VALUE FUNCTION WITH NICARAGUAN STUDENTS. Int. j. of Social Science and Economic Research, 7(4), 1141-1152. Retrieved from doi.org/10.46609/IJSSER.2022.v07i04.022 Chicago Leddo, John. "INVESTIGATING THE LEDDO, JAYANTI AND DUAN(2019) REVISED PROSPECT THEORY VALUE FUNCTION WITH NICARAGUAN STUDENTS." Int. j. of Social Science and Economic Research 7, no. 4 (April 2022), 1141-1152. Accessed April, 2022. doi.org/10.46609/IJSSER.2022.v07i04.022.
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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 40 high school students in Nicaragua, a poor country where previous research suggests students are more tolerant toward risk, were given the Leddo and Shukla (2020) scenarios involving gains and losses. Results showed that students chose the risky alternative in equal numbers regardless of whether the decisions involved gains or losses or outcomes above or below aspiration and avoidance levels. These results were consistent with neither those predicted by classical Prospect Theory nor those predicted by the Leddo et al. (2019) revised Prospect Theory value function.

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