Prospect Theory and Decision-Making Under Risk: A Cross-Disciplinary Systematic Review of Its Reception and Applications

Introduction: This systematic review examines the influence of Prospect Theory (PT) across finance, management, and psychology. By analyzing literature along two dimensions—scholarly stance toward the theory and its functional contributions—this study provides a novel, common framework to measure and compare PT’s impact across diverse academic fields.

Methods: Following PRISMA 2020 guidelines, the Web of Science database was searched for "prospect theory" or "loss aversion" (1979–2024). To assess methodological quality and perform a high-impact synthesis, a purposive sampling strategy was employed—inspired by Holmes et al. (2011)—where only the top 25 most-cited articles from predetermined prestigious journals were screened to reflect scholarly consensus. Eligibility required a direct application of PT or Cumulative Prospect Theory. Google Scholar identified additional records. For the first dimension (scholarly stance), a standardized coding protocol was used: studies fully affirming PT received 1 point, while partial affirmations received 0.5 points. For the second dimension (contributions), studies were categorized as "theory building" or "explanation of a concept." A qualitative and quantitative synthesis was performed. This review was not registered.

Results: The final review included 55 articles: 27 in management, 16 in finance, and 12 in psychology. Scholarly affirmation scores were 16.5 for management, 10 for finance, and 7 for psychology, while rejection scores were 4.5, 5, and 2, respectively. Regarding functional contributions, PT was utilized for theory building in 12 management, 6 finance, and 6 psychology studies. Conversely, PT was used for conceptual explanation in 12 management, 7 finance, and 4 psychology studies.

Conclusions: This review demonstrates a predominantly affirmative scholarly stance toward PT, ranging from 66.67% to 78.57% across disciplines. Furthermore, PT's contributions are nearly equally distributed between theory building and conceptual explanation across all three fields.