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Prospect Theory

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Another excellent example of how Prospect Theory is utilized in everyday life occurs within the United States. This country, existing as a relative representative democracy, is faced with dozens of social, political, and cultural dilemmas each day. These problems are often so complex and convoluted as to require a vote or shared public opinion on the matter. The final decisions that are made relative to these problems and their solutions often involve extremely complex risk assessments, sometimes even to the point of not assessing the final amalgamation and end result. This shows clearly the basic tendency for humans to consider many of the underlying potentials for risk based on specific outcomes yet be completely blind or inconsiderate relative to the aggregate outcomes and the limitless potential for infinite possibilities

Perhaps one of the most interesting examples of how human beings use Prospect Theory to help categorize and navigate their everyday lives is in the relationships people chose to take part in. These relationships often have other psychological influences and benefits like the realization and affirmation of the ego, but the way in which people approach relationships has a lot to do with risk aversion and the calculation of potential