Unlocking Team Motivation: How Prospect Theory Can Drive Results

What Is Prospect Theory?

Prospect Theory, introduced by psychologists Daniel Kahneman and Amos Tversky, explains that losing something feels worse than gaining the same thing feels good. For example, losing $100 hurts more than finding $100 feels great. This theory shows that people aren’t always rational when making decisions, especially when it comes to risks and rewards.

Why It Matters at Work?

In the workplace, you can use this idea to motivate people. Instead of just talking about the benefits of success, it can be more effective to highlight what might be lost if a task isn’t completed, like losing a client or missing a big opportunity. People tend to work harder when they want to avoid a loss.

Recent Study

A recent study showed that teams who were reminded about the risks of missing deadlines, like losing clients, performed better than those who were only offered rewards. This proves that understanding Kahneman and Tversky’s Prospect Theory can help you lead more effectively and get better results.