According to prospect theory, how do individuals typically evaluate potential losses compared to potential gains?

Prospect theory suggests that people often feel losses more strongly than gains of the same size. This means that losing $100 feels worse than the happiness of gaining $100. For example, if someone has to choose between losing $50 or gaining $50, they are more likely to avoid the loss because the pain of losing is greater than the pleasure of gaining. This tendency can lead people to make decisions that seem irrational, like holding onto losing investments instead of selling them. Overall, prospect theory shows that our emotions heavily influence how we make choices, especially when it comes to risks.