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Keywords:

  • prospect theory;
  • human nature;
  • sources of preferences

Central to prospect theory are far-reaching claims about what people fear and what gratifies them. Subjective well-being is a topic that social science has been reluctant to discuss in recent years, but it is central to much of our lives. A loss inflicts more harm than a comparable gain produces pleasure; this fact and the related endowment effect are important parts of our psychological makeup. The importance of change rather than absolute value position, and the related significance of the reference point and how it can be altered, can be seen as integral to human nature.