A Review of Prospect Theory

Abstract

Behavioral decision derived from the paradox of the expected utility theory. With the introduction of cognitive psychology, it opened up a road for the field of behavioral decision. Now countless scholars are wandering in behavioral decision related with prospect theory, it is worth mentioning the prospect theory proposes Daniel Kahneman won the Nobel Prize in economics in 2002. It should be the recognition for his important contribution to the academic. This paper is a review of prospect theory.