Prospect theory
A) Is an alternative to expected utility theory that may resolve a number of puzzles related to risky decisions
B) Was proposed by Daniel Kahneman only
C) Was proposed by John Nash
D) Was proposed by Ryerson

Question

Quizplus · Accepted Answer

Prospect theory, proposed by Kahneman and Tversky in 1979, is an alternative to expected utility theory that takes into account the psychological processes that individuals use when making decisions under risk. It explains that individuals weigh the potential gains and losses of a decision differently and tend to be risk-averse when considering gains, but risk-seeking when considering losses. This theory has been shown to provide more accurate predictions of decision-making behavior than expected utility theory in various contexts.

Prospect Theory