There’s the Framing Effect, which demonstrates that people respond differently to the same choice depending on how it is framed (people place greater value on moving from 90 percent to 100 percent—high probability to certainty—than from 45 percent to 55 percent, even though they’re both ten percentage points). Prospect Theory explains why we take unwarranted risks in the face of uncertain losses. And the most famous is Loss Aversion, which shows how people are statistically more likely to act to avert a loss than to achieve an equal gain. Kahneman later codified his research in the 2011
...more
