Prospect theory

We prefer to avoid making a loss over making a profit of the same value.

• When deciding on situations which can lead to gains, we prefer to decide on the options that are risk-averse - gaining less with more certainty.
• When it can lead to losses, we are risk-seeking - we prefer solutions that lead to smaller values - as long as it has the potential to avoid losses.

Cause

• Loss aversion
• Risk Aversion