Volume 4 • Issue 1 • PP: 46-54 • 2026
Affective-Cognitive Prospect Theory: An Integrative Psychological-Economic Model of Decision-Making under Uncertainty
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© 2026 The Author(s). Published by ASPG. This article is licensed under the Creative Commons Attribution 4.0 International License (CC BY 4.0).
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Standard models of decision-making under uncertainty, from expected utility theory to cumulative prospect theory, treat risk preferences as fixed individual traits. Yet a substantial psychological literature shows that risk-relevant preferences shift systematically with the decision-maker’s momentary internal state: affective arousal amplifies loss aversion, while cognitive load and time pressure push judgment toward heuristic, more distorted probability processing. This paper proposes Affective-Cognitive Prospect Theory (ACPT), a state-dependent extension of cumulative prospect theory in which the loss-aversion coefficient is an increasing function of affective arousal and the curvature of the probability-weighting function is a decreasing function of cognitive load, each grounded in an established psychological literature.
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References
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