New theory explains why people make risky decisions in finance
The paper discusses a method for understanding how people make decisions when faced with uncertainty and risk. It explores the idea that people tend to be cautious when gaining something but take more risks when losing. The research also shows that people tend to focus more on unlikely events and less on likely ones. By combining different theories, the study offers a new way to understand decision-making that can be useful in finance, insurance, and stock markets.