Figure 2.

(a) Prospect theory describes a mathematical function that maps between financial gains and losses and the subjective value that individuals experience. This function can be used to predict how an individual will make decisions and explains their tendency to exhibit risk‐seeking or risk‐averse behavior. (b) A central part of this theory is a functional account of how individuals treat probability values when making decisions, illustrating how small probability events receive more consideration than large probability events when making choices.