When we have something good, we want to be sure we don’t lose it, so we’re careful and don’t want to take risks. But when we’re missing something, we might be more willing to take risks and try to get what we want. So, the Prospect theory is a behavioural model that describes how people make decisions under conditions of risk and uncertainty. Because people feel the pain of loss more strongly than the pleasure of equivalent gains, the Prospect Theory shows that individuals are more risk-averse when it comes to gains but more risk-seeking when it comes to losses.
