Prospect theory is an analysis of how people make decisions in certain contexts that don't line up with utility maximization. That is, it studies a psychological phenomoneon. Think of a $1.99 price tag vs a $2.00 price tag. The difference looks much larger than it is. That's psychology.
It's unsurprising that the effects are seen most when the amounts are small. With large amounts, people think harder and are more likely to follow rational choice theory.
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Prospect theory is an analysis of how people make decisions in certain contexts that don't line up with utility maximization. That is, it studies a psychological phenomoneon. Think of a $1.99 price tag vs a $2.00 price tag. The difference looks much larger than it is. That's psychology.
It's unsurprising that the effects are seen most when the amounts are small. With large amounts, people think harder and are more likely to follow rational choice theory.