ZhiKe AI

Jun 20, 2026 · Fundamentals

Why You Play It Safe on Gains but Gamble on Losses: 3 Steps to Counter Prospect Theory Biases

The article explains how Prospect Theory reveals three systematic biases—reference dependence, loss aversion, and risk‑preference reversal—that cause people to sell winning stocks, hold losing ones, and make opposite choices when faced with gains versus losses, and offers a three‑step method to mitigate these biases.