Cumulative prospect theory and almost stochastic dominance in valuation of decision alternatives

Searching for good decision rules is one of the most important direction of research in decision making. There are well known and objective rules consistent with rationality, for example stochastic dominance rules, but, according to research based on behavioural approach, decision makers don't always act rationally. Relatively new tools, which model real choices, are cumulative prospect theory rules and almost stochastic dominance rules. The aim of our paper is to examine the consistency of the valuation of decision alternatives based on the cumulative prospect theory and the almost stochastic dominance rules. We show that choices made on the basis of considered tools are not always consistent, but the identification of causes of this discrepancy needs further research.