Concept · Decision-Making Mental Models
Prospect Theory
Origin: Kahneman & Tversky
Biological Parallel
Starlings switch from risk-averse to risk-seeking behavior based on current energy state—a stunning validation of prospect theory. When energy reserves are above survival threshold (gain frame), birds choose predictable food sources; when below threshold (loss frame), they gamble on variable patches because certain starvation is worse than possible starvation. The reference point (survival threshold) determines risk preferences, not absolute outcomes. Biology discovered prospect theory millions of years before Kahneman and Tversky formalized it.