NABARD Grade A (Assistant Manager) 2023 · Question 103 of 196

Which of the following theories says that investors value gains and losses differently, placing more weight on perceived gains versus perceived losses?

Prospect theory

ABounded rationality theory
BBehavioural theory
CProspect theoryCorrect
DSatisficing theory
ENormative theory

Answer: C. Prospect theory

Explanation

Prospect theory (Kahneman and Tversky): given equal probabilities, most people retain the wealth they have rather than risk it; people are averse to loss and would rather avoid a loss than take a risk for an equivalent gain.

Source: Memory Based Paper NABARD Grade A 2023 - Phase I Shift II (ixamBee) · memory-based

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