International Journal of Scientific and Research Publications

IJSRP, Volume 6, Issue 9, September 2016 Edition [ISSN 2250-3153]


Analytical Proof of Bounded Rationality Theory on Unitas SACCO Members in Kenya: Bayesian Approach
      Stanley Kirika
Abstract: The first of the four fundamental assumptions in economics and standard finance is that humans are rational actors, which does not hold good all the time. This anomaly begot behavioural finance that recognizes instances of irrational decision making in human beings. Rationality bounds in financial decision making as espoused in bounded rationality theory need to be determined to reflect how humans actually behave rather than how they should behave; to pave way for modification of classical economics and standard finance theories. This analytical proof of bounded rationality utilizes LOT-R parameterized cumulative prospect theory decision weights function to transform subjective to objective probabilities.

Reference this Research Paper (copy & paste below code):

Stanley Kirika (2018); Analytical Proof of Bounded Rationality Theory on Unitas SACCO Members in Kenya: Bayesian Approach; Int J Sci Res Publ 6(9) (ISSN: 2250-3153). http://www.ijsrp.org/research-paper-0916.php?rp=P575753
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