Prospect theory
nounpros·pect the·o·rypronounced PROS-pekt THEE-ə-ree
Last reviewed 16 April 2026
What does the noun Prospect theory mean?
A behavioural economics theory developed by Kahneman and Tversky showing that people evaluate outcomes relative to a reference point, not in absolute terms. Losses from the reference point are felt roughly twice as strongly as equivalent gains.
How the noun Prospect theory is used
Prospect theory explains why losing $50,000 on a property feels so much worse than gaining $50,000 feels good — losses hit roughly twice as hard as gains.
Related words
Cite this entry
MLA citation: "Prospect theory." How to Property, 16 Apr. 2026, https://howtoproperty.com.au/definitions/prospect-theory. Accessed 29 May 2026.
Chicago citation: How to Property. "Prospect theory." Last modified April 16, 2026. https://howtoproperty.com.au/definitions/prospect-theory.
APA citation: How to Property. (2026, April 16). Prospect theory. https://howtoproperty.com.au/definitions/prospect-theory