The prospect theory maintains that consumers frame decision alternatives in terms of gains and losses according to a value function.

Question

Quizplus · Accepted Answer

The statement accurately describes the key principles of the prospect theory. Consumers often evaluate decision alternatives in terms of potential gains and losses, which can be influenced by their perception of the reference point. The value function reflects how consumers weigh these gains and losses, with diminishing marginal utility for both positive and negative outcomes.

The Prospect Theory Maintains That Consumers Frame Decision Alternatives in Terms