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Prospect Theory

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Prospect Theory
A theory stating that investors are more likely to make an investment if it is advertised in terms of growth rather than loss. That is, an advertiser is more likely to be successful if he argues that an investment will probably return 10% than if he argues that it might lose 100%. Prospect theory is a fairly obvious concept, but it important to remember when making recommendations. See also: Behavioral Economics.


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According to prospect theory, pioneered by psychologists Amos Tversky and Daniel Kahneman, the idea of losing money is a much more powerful motivator than a gain.
Leading experts on legal theory have contributed to this "toolkit" for testing the law as it applies to both Expected Utility and its alternative, the Prospect Theory.
For some recent challenges to the interpretation of experiments in terms of prospect theory, see Charles R.
 
 
 
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