Guides

Risk & Prospect Theory

6 free guides in this category.

Guides in this category.

Two classic experiments revealing how human decisions consistently violate standard economic theories about rational choice under uncertainty.

Our tendency to avoid unknown probabilities more than known risks, shaping decisions from medical choices to financial investments.

The guaranteed amount you'd accept instead of a risky option, and the extra reward you require for taking that risk.

People value losses about twice as much as equivalent gains, and decisions depend on reference points rather than final outcomes.

How people differ in their tolerance for uncertainty, and how economists measure those differences through the curvature of utility functions.

A method for ranking risky choices by determining if one option is objectively better than another, regardless of your risk tolerance.