The Three Fundamental Trade-Offs in Life

Chara: Decision theory was focused on basically trying to model and test how people are actually solving three trade-offs that I call them the three fundamental trade-offs in life. And there is also another term that people might now associate with game theory, decision theory, and that's prospect theory,. You can also say a few words on that term as well. So let's focus on this. The first trade-off is the trade-off between risk and return. It's of course you can think about financial decisions. Do I put my money in bonds or do I put your money in stocks? We started with what is called expected utility theory and then we move into prospect theory.