Prospect theory
Prospect theory is a theory of behavioral economics and behavioral finance that was developed by Daniel Kahneman and Amos Tversky in 1979. The theory was cited in the decision to award Kahneman the 2002 Nobel Memorial Prize in Economics. 

Based on results from controlled studies, it describes how individuals assess their loss and gain perspectives in an asymmetric manner (see loss aversion). For example, for some individuals, the pain from losing $1,000 could only be compensated by the pleasure of earning $2,000. Thus, contrary to the expected utility theory (which models the decision that perfectly rational agents would make), prospect theory aims to describe the "actual" behavior of people.

In the original formulation of the theory, the term "prospect" referred to the predictable results of a lottery. However, prospect theory can also be applied to the prediction of other forms of behaviors and decisions.
Q647525
behavioral economics
Concept
Q233950
Daniel Kahneman
PER
Q474333
Amos Tversky
PER
Q47170
Nobel Memorial Prize in Economics
MEDIA
Q367359
controlled studies
Concept
Q1415187
individuals
Concept
Q2874240
loss aversion
UNK
Q2319304
expected utility theory
Concept
Q1139524
rational agents
UNK
Q9332
behavior
Concept
Q189409
lottery
Concept
Q1151839
Prospect theory
Concept
1979-01-01T00:00:00Z^^http://www.w3.org/2001/XMLSchema#dateTime
1979
DATE
2002-01-01T00:00:00Z^^http://www.w3.org/2001/XMLSchema#dateTime
2002
DATE
+1.000^^http://www.w3.org/2001/XMLSchema#decimal
1,000
NUMBER
+2.000^^http://www.w3.org/2001/XMLSchema#decimal
2,000
NUMBER
discoverer or inventor
discoverer or inventor
significant person
significant person
field of work
notable work