Salman Ansari: The problems of 'gamble theory' in attitude to risk tools

It has been more than 40 years since the publication of Daniel Kahneman and Amos Tversky's Nobel prize-winning work on prospect theory. But prospect theory is one 40-year-old for whom time has not taken any perceptible toll and, if anything, it goes from strength to strength.  The theory, founded on results of controlled studies of responses to gambling scenarios, posits that people perceive loss and gain differently; we feel the pain of loss twice as strongly as we feel pleasure at a gain of equal size. The outcome typically being risk averse behaviour that is out of proportion to th...