In 1979, Kahneman and Tversky first proposed prospect theory, which describes some principles for how people tend to value and compare financial gains and losses. For example, one aspect of prospect theory is the ‘reflection effect’: people are more likely to act in a risky manner when making decisions about potential gains than about potential losses. Over the past 40 years, prospect theory has become one of the most influential frameworks in behavioral science, specifically in the context of decision-making under risk…
Published via BrainPost.
