prospect theory
E129165
Prospect theory is a behavioral economic framework that explains how people actually make decisions under risk and uncertainty, highlighting systematic deviations from the predictions of classical expected utility theory.
All labels observed (4)
| Label | Occurrences |
|---|---|
| prospect theory canonical | 4 |
| cumulative prospect theory | 2 |
| Prospect Theory: An Analysis of Decision under Risk | 1 |
| Prospect theory | 1 |
How this entity was disambiguated
This entity first appeared as the object of triple T1119773 — resolving that mention is where its identity was fixed. The disambiguator weighed these candidate entities and picked the highlighted one (or “None”, minting a new entity). This is how homonymy is resolved: the same surface form can point to different entities.
NED1
Entity disambiguation (via context triple)
gpt-5-mini-2025-08-07
Target entity: prospect theory Context triple: [expected utility theory, criticizedBy, prospect theory]
-
A.
expected utility theory (with John von Neumann)
Expected utility theory (with John von Neumann) is a foundational framework in economics and decision theory that models how rational agents make choices under uncertainty by maximizing the expected value of a utility function.
-
B.
Models of Bounded Rationality
Models of Bounded Rationality is a collection of Herbert A. Simon’s influential works that develop the concept of bounded rationality, explaining how real-world decision-making is constrained by limited information, cognitive capacity, and time.
-
C.
hedonic calculus
Hedonic calculus is a utilitarian method for quantifying and comparing the pleasure and pain produced by actions to guide moral decision-making.
-
D.
Decision Analysis
Decision Analysis is a scholarly journal that focuses on the theory and application of quantitative methods for making informed decisions under uncertainty.
-
E.
positive psychology
Positive psychology is a branch of psychology that scientifically studies human strengths, well-being, and optimal functioning to understand and promote what makes life most worth living.
- F. None of above. chosen
- G. Unsure - the case is ambiguous/there is not enough information to decide.
NED2
Entity disambiguation (via description)
gpt-5-mini-2025-08-07
Target entity: prospect theory Target entity description: Prospect theory is a behavioral economic framework that explains how people actually make decisions under risk and uncertainty, highlighting systematic deviations from the predictions of classical expected utility theory.
-
A.
expected utility theory (with John von Neumann)
Expected utility theory (with John von Neumann) is a foundational framework in economics and decision theory that models how rational agents make choices under uncertainty by maximizing the expected value of a utility function.
-
B.
Models of Bounded Rationality
Models of Bounded Rationality is a collection of Herbert A. Simon’s influential works that develop the concept of bounded rationality, explaining how real-world decision-making is constrained by limited information, cognitive capacity, and time.
-
C.
hedonic calculus
Hedonic calculus is a utilitarian method for quantifying and comparing the pleasure and pain produced by actions to guide moral decision-making.
-
D.
Decision Analysis
Decision Analysis is a scholarly journal that focuses on the theory and application of quantitative methods for making informed decisions under uncertainty.
-
E.
positive psychology
Positive psychology is a branch of psychology that scientifically studies human strengths, well-being, and optimal functioning to understand and promote what makes life most worth living.
- F. None of above. chosen
Statements (51)
| Predicate | Object |
|---|---|
| instanceOf |
behavioral economic theory
ⓘ
decision-making theory ⓘ theory of choice under risk ⓘ |
| addresses |
Allais paradox
ⓘ
St. Petersburg paradox qualitatively ⓘ |
| assumes | outcomes are evaluated as gains or losses relative to a reference point ⓘ |
| basisFor |
cumulative prospect theory
ⓘ
linked to:
prospect theory
|
| contrastsWith | expected utility theory ⓘ |
| coreConcept |
diminishing sensitivity
ⓘ
loss aversion ⓘ probability weighting ⓘ reference dependence ⓘ |
| criticizesAssumption |
linear probability weighting
ⓘ
outcome evaluation in terms of final wealth levels ⓘ perfect rationality ⓘ |
| developedBy |
Amos Tversky
ⓘ
Daniel Kahneman ⓘ |
| empiricalSupport |
field studies
ⓘ
laboratory experiments ⓘ |
| explains |
decision-making under risk
ⓘ
decision-making under uncertainty ⓘ systematic deviations from expected utility ⓘ |
| extendedBy |
cumulative prospect theory
ⓘ
linked to:
prospect theory
|
| field |
behavioral economics
ⓘ
psychology ⓘ |
| includesComponent |
probability weighting function
ⓘ
value function ⓘ |
| influenced |
behavioral finance
ⓘ
linked to:
behavioral economics
health economics ⓘ insurance demand modeling ⓘ marketing ⓘ public policy design ⓘ |
| predicts |
endowment effect
ⓘ
framing effects ⓘ preference reversals ⓘ reflection effect ⓘ risk aversion over gains ⓘ risk seeking over losses ⓘ status quo bias ⓘ |
| probabilityWeightingProperty |
overweights small probabilities
ⓘ
underweights moderate and large probabilities ⓘ |
| publicationYear | 1979 ⓘ |
| publishedIn | Econometrica ⓘ |
| states | losses loom larger than gains of equal magnitude ⓘ |
| titleOfSeminalPaper |
Prospect Theory: An Analysis of Decision under Risk
ⓘ
linked to:
prospect theory
|
| usedFor |
explaining insurance purchase decisions
ⓘ
explaining lottery participation ⓘ modeling investor behavior ⓘ |
| valueFunctionProperty | steeper for losses than for gains ⓘ |
| valueFunctionShape |
concave over gains
ⓘ
convex over losses ⓘ |
How these facts were elicited
The pipeline generated the facts above by prompting gpt-5.1 with this entity's name + description and the instruction below.
Instruction
You are a knowledge base construction expert. Given a subject entity and a description of it, return factual statements that you know for the subject as a JSON list of dictionaries(triples), where keys must be "subject", "predicate" and "object". The number of facts may be very high, between 25 to 50 or more, for very popular subjects. For less popular subjects, the number of facts can be very low, like 5 or 10. # Requirements - If you don't know the subject at all, return an empty list. - If the subject is not a named entity, return an empty list. - Include at least one triple where predicate is "instanceOf". - Do not get too wordy. - Separate several objects into multiple triples with one object.
Input
Subject: prospect theory Description of subject: Prospect theory is a behavioral economic framework that explains how people actually make decisions under risk and uncertainty, highlighting systematic deviations from the predictions of classical expected utility theory.
Referenced by (8)
Full triples — surface form annotated when it differs from this entity's canonical label.
subject linked to:
expected utility theory (with John von Neumann)
subject linked to:
prospect theory
linked to: prospect theory
subject linked to:
prospect theory
linked to: prospect theory
subject linked to:
prospect theory
linked to: prospect theory
subject linked to:
Daniel Kahneman (honorary doctorate, not student)
linked to: prospect theory
subject linked to:
Daniel Kahneman (honorary doctorate, not student)