Prospect theory:
A) is an alternative to expected utility theory that may resolve a number of puzzles related to risky decisions and was proposed by Daniel Kahneman and Amos Tversky.
B) gave puzzling results with respect to risky decisions and was improved by Daniel Kahneman and Amos Tversky's expected utility theory.
C) is an alternative to expected utility theory that may resolve a number of puzzles related to risky decisions and was proposed by John Nash.
D) gave puzzling results with respect to risky decisions and was improved by John Nash's expected utility theory.

Question

Quizplus · Accepted Answer

Prospect theory is an alternative to expected utility theory that was proposed by Daniel Kahneman and Amos Tversky to address some of the puzzles related to risky decisions. It is not a theory that was improved by expected utility theory. Choice B is incorrect. Choices C and D are also incorrect as John Nash did not propose or improve prospect theory.

Prospect Theory