Which statement is an element of prospect theory?
A)Decision makers work to avoid future catastrophic events.
B)Decision makers attach their own feelings onto another actor.
C)Decision makers assess the value of other decision makers.
D)Decision makers use a reference point for comparison.

Question

Quizplus · Accepted Answer

The statement "Decision makers use a reference point for comparison" is an element of prospect theory. The reference point serves as a baseline for the decision maker to evaluate the value of potential gains and losses. This is a key concept in prospect theory, which explains how people make decisions under uncertainty and risk. Among the other options, A describes the motive of risk aversion, B refers to empathy, and C refers to strategic assessment, but none of them directly relate to prospect theory.

Which Statement Is an Element of Prospect Theory