Question

Kahneman and Tversky used experiments to examine how people actually make decisions about risk. The researchers found a multi-step process with editing and evaluating phases. People showed a strong preference to avoid losses, much more than probability or expected value would suggest. Their name for this process is _______.

Answer 1

Answer:

prospect theory is the correct answer.

Explanation:

• Prospect theory is the psychological theory explained by Daniel Kahneman and Amos Tversky in the year 1979.

• Prospect theory is also termed as loss aversion theory.

• Prospect theory explains how somebody makes a decision and choose among the several options in the risk situation.

• Prospect theory is used to explain different perspectives of political and economic decision making such as in international connections.