Which theory examines risk assessment, loss aversion, and dependence on a reference or starting point, and explains why individuals consistently behave in ways different from what traditional economic and decision theory would predict?
A) Prospect theory
B) Game theory
C) Probability theory
D) Administrative theory of individual decision making

Question

Quizplus · Accepted Answer

Prospect theory examines risk assessment, loss aversion, and dependence on a reference or starting point, and explains why individuals consistently behave in ways different from what traditional economic and decision theory would predict. Game theory examines strategic behavior and decision making in interdependent situations, while probability theory deals with the quantification of uncertainty and random events. The administrative theory of individual decision making studies how individuals make decisions within organizations.

Which Theory Examines Risk Assessment, Loss Aversion, and Dependence on a Reference