Prospect theory - Wikipedia, the free encyclopedia

Prospect theory is a theory that describes decisions between alternatives that involve risk, i.e. alternatives with uncertain outcomes, where the probabilities are known. The model is descriptive: it tries to model real-life choices, rather than optimal decisions. // A revised version, called cumulative prospect theory overcame this problem by using a probability weighting function derived from Rank-dependent expected utility theory.

See original: Del.icio.us Prospect theory - Wikipedia, the free encyclopedia