Acronyms that contain the term prospect theory 

Prospect theory

Prospect theory is the earliest theory of behavioral economics and behavioral finance. Developed by Daniel Kahneman and Amos Tversky in 1979, it arguably earned Kahneman the 2002 Nobel Memorial Prize in Economics. It constitutes one of the first economic theories built using experimental methods. Based on results from controlled studies, it describes how individuals assess their loss and gain perspectives in an asymmetric manner (see loss aversion). For example, for some individuals, the pain from losing $1,000 could only be compensated by the pleasure of earning $2,000. Thus, contrary to the expected utility theory (which models the decision that perfectly rational agents would make), prospect theory aims to describe the actual behavior of people. In the original formulation of the theory, the term prospect referred to the predictable results of a lottery. However, prospect theory can also be applied to the prediction of other forms of behaviors and decisions.

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