Prospect theory

Prospect theory is a way of thinking about how people make decisions when they have to choose between two options, a risky one and a safe one. It explains why people might choose a risky option, even if it has a lower chance of success. Prospect theory says that people are more likely to take risks when they believe that if it works out, there will be a very big reward. In other words, people will take risks if they think that the possible reward is worth the possible risk.