Stock-Indices and Strategic Alliances as Evidence of the Invalidity of Third-Generation Prospect Theory, Related Approaches and Intertemporal Asset Pricing Theory: Three New Decision Models
20 Pages Posted: 14 Dec 2015 Last revised: 13 Sep 2017
Date Written: July 1, 2015
Abstract
This article: i) introduces three new decision models - MN Type-I Decision Model; MN Type-II Decision Model and MN Type-III Decision Model; ii) explains why Risk-Adjusted Indices (“RAIs”; a class of Governance-models) can cause systemic risk; iii) explains why Risk-Adjusted Indices, “Fundamental” Indices and options-based Indices are significant evidence that Prospect Theory (PR), Cumulative Prospect Theory (CPT) and Third Generation Prospect Theory (PT3) and related methods and most Intertemporal Asset Pricing Theories are individually and collectively invalid; iv) introduces concepts of “implicit” and “explicit” Strategic Alliances and Joint Ventures in Regulation and Enforcement (in China, Europe, the US and other countries); v) explains why intertemporal strategic alliances and joint ventures are evidence of the invalidity of most Intertemporal Asset Pricing Theories.
Keywords: Corporate Governance; Strategic Alliances; Cumulative Prospect Theory; Psychology; MN Type-I Decision Model; Social Welfare; Economic Growth; Financial Markets; Risk Adjusted Indices
Suggested Citation: Suggested Citation