Prospect Theory, developed by Kahneman & Tversky proposes that, regarding subjective and true probability, people tend to:

Question

Quizplus · Accepted Answer

Prospect Theory suggests that people tend to overestimate the likelihood of rare events, which means they overestimate small probabilities. This is part of the theory's broader explanation of how individuals assess potential losses and gains differently, leading to decisions that deviate from expected utility theory.

Prospect Theory, Developed by Kahneman & Tversky Proposes That, Regarding