Constraints on the representation of gambles in prospect theory (Q1095017)

\textit{D. Kahneman} and \textit{A. Tversky}'s prospect theory [Econometrica 47, 263-291 (1979; Zbl 0411.90012)] postulates that the subjective value of a gamble is determined by different combination rules depending on the outcomes of the gamble. The theory distinguishes regular from irregular gambles, and in addition, distinguishes two different kinds of irregular gambles. The representations of value for these classes of gambles are formally analogous, but they differ in the way that gamble probabilities are integrated with the worth of gamble outcomes. The present work identifies properties of preference, restricted betweenness and equivalence under interchange, that play a central role in justifying the use of different combination rules for different classes of gambles in prospect theory.