The experimentation of irrational behavior in individual decision-making

Prospect Theory challenged the decision-making principle of expected utility maximization based on rationality According to the prospect theory, individual decision making involves frame effect, reference point and certainty effect, under conditions of uncertainty. The author accepted 120 people as subjects in the experiment, showing that the attitudes to risk are different under uncertainty. The different from attitudes to risk indicates the process of making decision by individual is not only driven by expected utility, but also influenced by many kinds of psychological factors, the result implies that there are some irrational psychological characteristics, such as the firame effect, reference point and certainty effect etc.