OPTIONS TRADERS EXHIBIT SUBADDITIVE DECISION WEIGHTS

Professional options traders priced risky prospects as well as uncerta in prospects whose outcomes depended on future values of various stock s. The prices of the risky prospects coincided with their expected val ue, but the prices of the uncertain prospects violated expected utilit y theory. An event had greater impact on prices when it turned an impo ssibility into a possibility or a possibility into a certainty than wh en it merely made a possibility more or less likely, as predicted by p rospect theory. This phenomenon is attributed to the subadditivity of judged probabilities.