Prospect Theory

Prospect Theory, proposed by psychologists Daniel Kahneman and Amos Tversky, is a behavioral economic theory that describes how people make decisions under uncertainty. It suggests that individuals evaluate potential gains and losses relative to a reference point (usually the status quo) and exhibit risk aversion when faced with potential losses, but risk-seeking behavior when faced with potential gains. Losing hurts more than winning feels good 😨📉 Peoplefear losses more than they enjoy gains. For more mental models, please visit www.mentalmodelsdaily.com Get the full list at https://tinyurl.com/mentalmodelsdaily Follow us: X: @mindmodelsdaily https://x.com/mindmodelsdaily Instagram: @mentalmodelsdaily https://www.instagram.com/mentalmodelsdaily/ Youtube: https://www.youtube.com/@MentalModelsDaily/podcasts Spotify: https://open.spotify.com/show/1f0qi12saeBEJmtnjOSszg Amazon Music: https://music.amazon.co.uk/podcasts/6da552cf-1714-45ce-b302-7c6c69386fc3/mental-models-daily Apple Podcasts: https://podcasts.apple.com/gb/podcast/mental-models-daily/id1754257683 Castbox: https://castbox.fm/channel/Mental-Models-Daily-id6203840?country=us iHeartRadio: https://www.iheart.com/podcast/269-mental-models-daily-189536773/ Our Podcast music was provided by The Podcast Host and Alitu: The Podcast Maker app.