“I bought it when it was really cheap, around $300, and after it went up a ton, I decided to buy some more.. But after the crash, I think I’ll just sell it to break even.”
“I told you to get out of it sooner.”
Prospect Theory evaluates how individuals choose under risk and uncertainty, and aims to illustrate that sometimes choices are not optimal. This theory was first developed in 1979 by two psychologists, Amos Tversky and Daniel Kahneman, and a lot of behavioural economists later built on their work. In 2002, Professor Kahneman received the Nobel Prize in Economics for his work in Behavioural Economics (unfortunately, professor Tversky already passed away in 1996, and the Nobel Prize doesn’t award posthumously).
A few weeks ago, I was faced with the daunting task of writing about communication forms in my introduction to academic writing. As someone who is equally comfortable in communicating in symbols and words, but someone who is uncomfortable in both, this sounded like a terrible task and the end of my happy mark in one of my requisite courses. In the process of trying to merge economics and theories from the study of communications in class, I happened to stumble upon a paper detailing the effects of using certain vocabulary in the success of papers detailing primarily with mathematical concepts, like imaginary numbers or chaos theory. 
We’ve all been in a situation where a professor is teaching and everyone in the class is lost. Often in those situations no one raises their hands even though everyone in the class would benefit. Why?
It turns out game theory has an answer. We discuss this phenomena with Professor Joel Blit. We also discuss other, more serious situations of this game and some potential actions one can take to change the game.
It’s one of two major assumptions in economics, and taught within the first week in most 101 classes: rationality. How do we define rationality? Of course, we can assume that human behavior is “rational”, but that doesn’t help us construct any models unless we actually ascribe the word some meaning.