Investors' Decisions at Nairobi Stock Exchange Influenced by Framing and Loss Aversion.
Investors at the Nairobi Securities Exchange in Kenya don't always make rational decisions when it comes to investing. A new theory called prospect theory suggests that investors' choices are influenced by how a problem is presented to them and by their fear of losing money. A recent study found that the way information is framed can change how investors make decisions, and that people tend to feel the pain of losing money more than the joy of gaining the same amount. This means that investors' decisions can be swayed by how a situation is described to them and by their fear of losing money.