Facing Prospects Alone or Together
David Taylor poses the question as to whether consumers prefer to be alone or not in the face of a potential loss or gain
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Date: Tue, 16 Jan 2007 18:21:01 -0500
From: "David Taylor" <email@example.com>
Nearly 30 years ago, Kahneman and Tversky (1979) critiqued expected utility theory and presented a descriptive alternative model of decision-making known as prospect theory. Under prospect theory, the notion of value is assigned to gains and losses. In particular, the value function is based on deviations from a reference point and is normally concave for gains (risk aversion), often convex for losses (risk seeking) and steeper for losses than for gains (loss aversion).
Related to gains and losses, my question is:
If a person is in a potential "gain" (good) situation, do they prefer to be with others or alone? Similarly, if a person is in a potential "loss" (bad) situation, do they prefer to be with others (misery loves company) or alone?