A Teoria da Perspectiva

The prospect theory explains how individuals make decisions under risks and uncertainties, particularly in investments. 

Investors focus on changes relative to a reference point rather than absolute outcomes.

Loss aversion, a crucial concept in prospect theory, specifies that the fear of losses outweighs the value placed on equivalent gains. 

For example, losing one hundred dollars feels more impactful than gaining one hundred dollars.

The value function in Prospect Theory shows how people evaluate outcomes with a reference point. 

Gains are positioned on the concave portion of the curve, reflecting risk aversion, where people prefer smaller but certain gains over larger, uncertain rewards, meaning diminishing sensitivity to gains. 

Losses fall on the convex portion of the value function, indicating that individuals are more likely to take risks to avoid or recover from losses. 

The steeper slope for losses compared to gains quantifies the emotional impact of losses and reinforces the concept of loss aversion.

By understanding these patterns, investors can create rational strategies, mitigate biases, and achieve better outcomes.