"The satisfaction level of a new investor who has made a 120% return on their first $10,000 investment is higher than that of a wealthy seasoned investor who made the same $10,000 return, but has experienced many ups and downs over time."

This statement refers to _____:

Question

"The satisfaction level of a new investor who has made a 120% return on their first $10,000 investment is higher than that of a wealthy seasoned investor who made the same $10,000 return, but has experienced many ups and downs over time."

This statement refers to _____:

BlackTom AI · Accepted Answer

Prospect theory describes how people evaluate gains and losses relative to a reference point, with a value function that is concave for gains (diminishing sensitivity) and steeper for losses (loss aversion). This framework explains why the same objective monetary outcome can produce very different feelings of satisfaction depending on prior wealth, experience, and the reference point.

Step‑by‑step reasoning:
1. Compute the monetary gain described: a 120% return on a $10,000 investment equals 0.120 × $10,000 = $12,000 gain (final wealth from that investment = $22,000). The example contrasts the high satisfaction of a novice who sees this large percentage gain on an initial investment with the muted satisfaction of a wealthy, seasoned investor who achieves a similar absolute dollar gain (e.g., $10,000) after many ups and downs.
2. Apply key prospect theory concepts:
   - Reference dependence: utility is evaluated relative to a reference point (the novice’s starting wealth or first investment vs. the seasoned investor’s much larger reference wealth).
   - Diminishing sensitivity: the value function is concave for gains, so an additional $10k or $12k increases utility a lot when starting from a small base but much less when the same amount is small relative to overall wealth.
   - Experience and adaptation shift the seasoned investor’s reference point upward and make gains seem less salient.
3. Illustrative comparison: a 120% gain on a first $10k is a huge proportional improvement (subjectively large utility jump). For a wealthy investor, $10k is a tiny fraction of net worth and produces a much smaller utility increase due to diminishing marginal value of gains.

Why this is correct: prospect theory explicitly predicts differing subjective satisfaction from the same monetary outcome because of reference points and diminishing sensitivity — exactly what the scenario describes.

Why other options are incorrect:
- Representativeness bias: about judging probability by similarity, not differential satisfaction for identical outcomes.
- Framing: concerns how choices are presented, not how prior wealth changes experienced utility for the same outcome.
- Anchoring bias: reliance on an initial numeric anchor when estimating, not the reference‑dependent valuation described here.

Therefore, the correct answer is prospect theory, matching the provided answer.

"The satisfaction level of a new investor who has made a 120% return on their first $10,000 investment is higher than that of a wealthy seasoned investor who made the same $10,000 return, but has experienced many ups and downs over time." This statement refers to _____:单项选择题

类似问题

Prospect Theory can be described as investors and gamblers might behave in a manner consistent with the Expected Utility Theory.[Fill in the blank]

Prospect Theory suggests that...[Fill in the blank]

Which of the following are consequences of diminishing sensitivity?

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