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Home / Prospect Theory

Prospect Theory

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Could this flaw in human thinking be exploited for market gains?

People are hard-wired to make poor financial decisions under conditions of uncertainty. A new research paper explores whether a strategy built to exploit these biases in financial markets could succeed.

Prospect theory applied to retirement planning

In traditional economics, utility theory assumed that investors work off probability-weighted outcomes. Prospect theory can better explain actual investor behaviour and is a better tool for designing retirement plans.

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