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

Nwogugu, Michael C. I., 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 (July 1, 2015). Available at SSRN: https://ssrn.com/abstract=2702944 or http://dx.doi.org/10.2139/ssrn.2702944

Michael C. I. Nwogugu (Contact Author)

Independent ( email )

P. O. Box 11104
Enugu 400007, Enugu State 400007
Nigeria
2348149062100 (Phone)

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