Why Losing $100 Hurts More Than Winning $100 | Prospect Theory Explained | Day 01/30

Why Losing $100 Hurts More Than Winning $100 | Prospect Theory Explained | Day 01/30 Why does losing $100 feel so much worse than finding $100 feels good? In Day 1 of 30 Days, 30 Financial Principles, we break down Prospect Theory, the Nobel-winning idea from Daniel Kahneman and Amos Tversky (1979) that explains how people really make decisions about money and risk. You'll learn: • Why we judge money against a reference point, not just the final amount • Loss aversion: why losses carry more weight than equal gains • The Prospect Theory value function, one symbol at a time (x, α, β, λ) • The certainty effect and the reflection effect • Real life: investing, shopping, negotiation, gambling • 3 habits for better money decisions CHAPTERS 0:00 The surprising result 2:05 30 Days, 30 Financial Principles 2:42 Who developed Prospect Theory? 4:25 Big idea #1: The reference point 6:41 Big idea #2: Loss aversion 8:33 The math: the value function 11:14 Certainty effect & reflection effect 13:16 Real-life examples 15:35 3 habits for better money decisions 17:13 What the research says 18:23 Recap + tomorrow: Mental Accounting References • Kahneman & Tversky (1979). Prospect Theory: An Analysis of Decision Under Risk. Econometrica 47(2), 263–291. • Tversky & Kahneman (1992). Advances in Prospect Theory. Journal of Risk and Uncertainty 5, 297–323. Educational content only, not financial advice. #ProspectTheory #LossAversion #BehavioralFinance #PersonalFinance #AceBySumit prospect theory, loss aversion, behavioral finance, behavioural economics, kahneman tversky, daniel kahneman, prospect theory explained, value function, certainty effect, reflection effect, psychology of money, why losing hurts more, financial decisions, investing psychology, reference point, 30 days 30 financial principles, acebysumit, personal finance, finance for beginners