What is prospect theory? How was it developed? What does it explain in regard to how people make decisions and take risks? In 1973, the Yom Kippur War led Israeli psychologists Daniel Kahneman and Amos Tversky to shift their focus of study. Their ensuing examination of the decision-making process birthed a theory that transformed the way we understand not only decision-making but behavior in general. Keep reading to learn the background and development of prospect theory as well as what the theory explains.
What Is Prospect Theory? How a War Led to a Breakthrough










