Write a 2,000-word report on prospect theory, giving an overview of the theory and evidence and explaining how it might be relevant for politicians to understand with regard to their own policy decision making, and/or the effect that decision may have on the public in general.

The government is developing its financial strategy for a post-pandemic world. Going ahead there are policy decisions to be made that will involve some risk to individuals’ financial circumstances, with potential gains but also risks of losses. They realise that these risks should be evaluated from a psychological rather than a purely economic perspective, and have commissioned you to write a 2,000-word report on prospect theory, giving an overview of the theory and evidence and explaining how it might be relevant for politicians to understand with regard to their own policy decision making, and/or the effect that decision may have on the public in general.