Asked by Natalia Smart on May 16, 2024
Verified
The tendency for people to dislike losing a particular amount more than they like gaining the same amount is called:
A) implicit favorite.
B) bounded rationality.
C) intuition.
D) nonprogrammed decision making.
E) prospect theory.
Prospect Theory
A psychological theory that describes how people choose between probabilistic alternatives that involve risk, where the potential for losses is weighted more heavily than equivalent gains.
Losing
The state or condition of not winning, often involving missing out on a prize, goal, or desired outcome.
Gaining
The process of acquiring or increasing something, often used in the context of knowledge, skills, or assets.
- Understand the implications of prospect theory in decision making.
Verified Answer
AV
Adriana Velandia RojasMay 16, 2024
Final Answer :
E
Explanation :
The tendency described is a key aspect of prospect theory, which suggests that individuals weigh potential gains and losses asymmetrically. Specifically, the theory argues that people experience more pain from losses than pleasure from equivalent gains, resulting in risk aversion when faced with potential losses and risk seeking behavior when faced with potential gains.
Learning Objectives
- Understand the implications of prospect theory in decision making.