Behavioral Economics and Uncertainty
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Behavioral Economics and Uncertainty: In the final section in this chapter, the authors discuss some lessons from behavioral economics related to the topic of uncertainty. Of the three concepts considered here, the discussion of prospect theory is the most complicated and the most worthy of extra time. A careful discussion of the basic theory along with the implications (such as loss aversion) evident in the graph of the value function in Figure 14.6 is highly recommended.

