Reflecting on reflection: prospect theory, our behaviours, and our environment

In a previously published article, I reported some tests of prospect theory’s reflection effect over outcomes defined by money and life years gained from treatment. Those results suggested qualified support for the reflection effect over money outcomes and strong support over longevity outcomes. This article reruns those tests while accounting for the intensity of individual risk attitudes, and, overall, show consistency with the reflection effect. However, I argue that these results do not necessarily offer support for the explanatory power of prospect theory. Rather, the results may be driven by evolved responses to circumstances that provoke perceptions of scarcity and abundance. Therefore, from an ecological perspective, behavioural patterns such as those that are consistent with the reflection effect, which, by extension, tend to be considered as erroneous or biased by most behavioural economists because they conflict with the postulates of rational choice theory, may not be unreasonable. Recognising as such is important when considering how behavioural insights ought to inform public policy design and implementation.