Prospect theory modifies expected utility thoery in 2 main ways

1. Prospect Theory introduces the idea of "Loss Aversion”, which holds that people experience losses more strongly than gains of equal value. This means that people may feel more discomfort from the same potential loss than they would feel pleasure from the same potential gain. 2. Prospect Theory also introduces the concept of “Risk Aversion”, which states that people generally prefer safer options in the face of risk and uncertainty. This means that when faced with two choices, individuals are more likely to choose the one with a more certain outcome, even if it is not the option with the highest potential reward.