> ## Documentation Index
> Fetch the complete documentation index at: https://docs.fincept.in/llms.txt
> Use this file to discover all available pages before exploring further.

# Prospect Theory Value Function

> Evaluate Kahneman-Tversky Prospect Theory value function with loss aversion and diminishing sensitivity. Value function: v(x) = x^alpha for gains (x ≥ 0), v(x) = -lambda*|x|^beta for losses (x < 0). Captures behavioral phenomena: loss aversion (losses hurt more than gains feel good), reference dependence, and diminishing sensitivity. Returns value, marginal value, and loss aversion ratio. Essential for behavioral economics and decision theory. [Tier: STANDARD, Credits: 2]



## OpenAPI

````yaml api-specs/economics.json post /quantlib/economics/utility/prospect-theory
openapi: 3.1.0
info:
  title: FinceptQuantLib API - Economics
  description: >-
    Economics module endpoints for FinceptQuantLib API - general equilibrium,
    game theory, auctions, and utility functions
  version: 3.0.0
  contact:
    name: Fincept API Support
    url: https://fincept.in
servers:
  - url: https://api.fincept.in
    description: Fincept API Production Server
security:
  - APIKeyHeader: []
tags:
  - name: quantlib-economics
    description: >-
      Economics module - general equilibrium, game theory, auctions, and utility
      theory
    x-displayName: Economics
paths:
  /quantlib/economics/utility/prospect-theory:
    post:
      tags:
        - quantlib-economics
      summary: Prospect Theory Value Function
      description: >-
        Evaluate Kahneman-Tversky Prospect Theory value function with loss
        aversion and diminishing sensitivity. Value function: v(x) = x^alpha for
        gains (x ≥ 0), v(x) = -lambda*|x|^beta for losses (x < 0). Captures
        behavioral phenomena: loss aversion (losses hurt more than gains feel
        good), reference dependence, and diminishing sensitivity. Returns value,
        marginal value, and loss aversion ratio. Essential for behavioral
        economics and decision theory. [Tier: STANDARD, Credits: 2]
      operationId: prospect_theory_quantlib_economics_utility_prospect_theory_post
      requestBody:
        content:
          application/json:
            schema:
              type: object
              required:
                - outcome
              properties:
                alpha:
                  type: number
                  description: Diminishing sensitivity exponent for gains (typically 0.88)
                  minimum: 0
                  maximum: 1
                  default: 0.88
                  example: 0.88
                beta:
                  type: number
                  description: Diminishing sensitivity exponent for losses (typically 0.88)
                  minimum: 0
                  maximum: 1
                  default: 0.88
                  example: 0.88
                lambda_param:
                  type: number
                  description: >-
                    Loss aversion parameter (typically 2.25, meaning losses hurt
                    2.25x more than gains)
                  minimum: 1
                  default: 2.25
                  example: 2.25
                wealth:
                  type: number
                  description: >-
                    Reference point (typically 0 for gains/losses relative to
                    status quo)
                  default: 0
                  example: 0
                outcome:
                  type: number
                  description: >-
                    Outcome to evaluate (positive = gain, negative = loss
                    relative to reference)
                  example: -100
            example:
              alpha: 0.88
              beta: 0.88
              lambda_param: 2.25
              wealth: 0
              outcome: -100
        required: true
      responses:
        '200':
          description: Successful Response
          content:
            application/json:
              schema:
                type: object
                properties:
                  success:
                    type: boolean
                    example: true
                  data:
                    type: object
                    properties:
                      value:
                        type: number
                        description: Prospect theory value at outcome
                        example: -106.54
                      marginal:
                        type: number
                        description: Marginal value (derivative)
                        example: 1.06
                      loss_aversion_ratio:
                        type: number
                        description: Loss aversion coefficient lambda
                        example: 2.25
              example:
                success: true
                data:
                  value: -106.54
                  marginal: 1.06
                  loss_aversion_ratio: 2.25
        '401':
          $ref: '#/components/responses/UnauthorizedError'
        '402':
          $ref: '#/components/responses/InsufficientTierError'
        '422':
          description: Validation Error
          content:
            application/json:
              schema:
                type: object
                properties:
                  detail:
                    type: array
                    items:
                      type: object
              example:
                detail:
                  - loc:
                      - body
                      - outcome
                    msg: field required
                    type: value_error.missing
      security:
        - APIKeyHeader: []
components:
  responses:
    UnauthorizedError:
      description: Authentication information is missing or invalid
      content:
        application/json:
          schema:
            type: object
            properties:
              detail:
                type: string
                example: Invalid API key
    InsufficientTierError:
      description: API tier insufficient for this endpoint
      content:
        application/json:
          schema:
            type: object
            properties:
              detail:
                type: string
                example: Endpoint requires Basic tier or higher
  securitySchemes:
    APIKeyHeader:
      type: apiKey
      in: header
      name: X-API-Key
      description: >-
        API key for authentication. Get your key at
        https://api.fincept.in/auth/register

````