Government Risk Management Based on Prospect Theory

Currently, China is through the period of high frequency of emergencies, which have become important factors demolishing Chinese social stability at present time. It is of great significance to appropriately recognize and deal with those emerging events. Firstly, this article conducts a scientific analysis in the causes and the process of the events inducing emergencies from the perspective of the theory of prospect. Then based on the prospect theory, a theoretical model is established through the research on the theory of prospect as well as the conduction of analysis on the decision-making behaviors and progress of the risk management decision-makers. Finally, the enlightenments of the prospect theory on government crisis and risk management are put forward from the public perspective of risk choosing and management.