4. Why We Take Bad Bets to Avoid a Loss

This is an AI generated podcast drawing from “Prospect Theory: an Analysis of Decision Under Risk” by Daniel Kahneman and Amos Tversky.

1979 · Econometrica

16:01 Economics

People systematically violate standard economic rules when making choices under risk, favoring certainty for gains while gambling to avoid losses. An alternative framework shows that people evaluate decisions based on potential gains and losses relative to a reference point, rather than overall wealth.

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