CONSISTENCY OF THE PROSPECT THEORY AND THE EXPECTED UTILITY THEORY

The expected utility theory(EUT)has dominated the theory of decision under risk since the publication of von Neumann and Morgenstern's distinguished monographTheory of Games and Economic Behavior.But human behavior that violates the EUT axiom has contin- ually been detected.In a prominent paperProspect Theory:An analysi.s of Decision under Risk,Kahneman and Tversky summarized the main violations and generalized a descriptive model to explain these anomalies.This paper presents a proof that under the axiom of the algebra of combination,these two theories are exactly identical.