Which of the following suggests that people express a different degree of emotion towards gains than towards losses?
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A. B. C. D.B
The correct answer is B. Prospect theory.
Prospect theory, developed by psychologists Daniel Kahneman and Amos Tversky, suggests that people express a different degree of emotion towards gains than towards losses. According to this theory, people tend to feel more pain from losses than pleasure from gains, a phenomenon known as "loss aversion."
Loss aversion is the tendency for people to prefer avoiding losses over acquiring equivalent gains. In other words, losing $100 feels worse than gaining $100 feels good. This phenomenon is observed in a variety of contexts, from investing and gambling to consumer behavior and decision-making.
However, it's important to note that loss aversion is just one component of prospect theory. The theory also suggests that people evaluate outcomes relative to a reference point, which can affect their perceptions of gains and losses. This reference point is often determined by the status quo or the individual's expectations.
Illusion of control refers to the belief that individuals have more control over outcomes than they actually do. Anchoring is a cognitive bias that occurs when people rely too heavily on the first piece of information they receive when making a decision.
In summary, while loss aversion is related to the differential emotional response to gains and losses, it is prospect theory that provides a more comprehensive explanation for this phenomenon.