Prospect Theory: An Analysis of Decision under Risk

Details

Photo

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Name

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Authors

Daniel Kahneman, Amos Tversky

Year

1979

Field

Behavioral economics

One big idea

People hate losses way more than they like equivalent gains, and we judge outcomes relative to a reference point, not in absolute levels.

My take

Explains why I’ll chase a bad bet to get “back to zero” but won’t try a new pizza place if there’s a 10% chance it’s mid.