Prospect Theory: 7 Ways Loss Aversion Shapes Your Decisions
Last updated: March 2026 Prospect theory, developed by Daniel Kahneman and Amos Tversky in 1979, explains why losing $100 hurts roughly twice as much as gaining $100 feels good. The theory describes three core mechanisms that drive irrational decisions: reference-dependent evaluation (gains and losses measured from a starting point, not absolute wealth), loss aversion (losses … Read more