Glossary

Glossary

Term Book Chapter Definition
Prospect Theory Behavioral Finance Chapter 1: Foundations of Behavioral Finance This theory suggests that people make decisions based on the potential value of losses and gains rather than the final outcome. This can lead to risk-averse behavior when facing gains and risk-seeking behavior when facing losses.
Prospect Theory Corporate Finance Chapter 15: Behavioral Corporate Finance Proposed by Daniel Kahneman and Amos Tversky, this theory suggests that individuals value gains and losses differently, often exhibiting loss aversion.