Prospect theory maintains that humans, ... The theory states that investors value gains and losses differently, prioritizing avoidance of risk. In the context of investing, ...

This paper provides a theoretical rationale for three experimental results of Prospect Theory: risk preferences are over gains and losses, loss aversion and diminishing sensitivity. We consider a ...

It is 35 years since . Daniel Kahneman and Amos Tversky first outlined their version of what was to become prospect theory, highlighting the high value investors accord to loss aversion relative ...