The formulators of this theory performed an experiment in which they asked people what percentage of members of the UN were African nations in order to formulate the "anchoring and adjustment heuristic".
The formulators of this theory performed an experiment in which they asked people what percentage of members of the UN were African nations in order to formulate the "anchoring and adjustment heuristic". A cumulative version of it is able to take framing effects into account. One of its creators, along with Knetsch and Thaler, found a violation of Coase's theorem in which a person values an object they own more than an identical object they do not own. It posits a concave value curve for gains and a convex one for losses. This model suggests that loss aversion is a disproportionate determinant of behavior. The canonical example of this theory explains why people will travel far for a large percentage discount rather than a small one. For 10 points, name this theory in behavioral economics formulated by Amos Tversky and Daniel Kahneman
The formulators of this theory performed an experiment in which they asked people what percentage of members of the UN were African nations in order to formulate the "anchoring and adjustment heuristic".
Prospect Theory