Does Prospect Theory explain Trump and Brexit votes?
Prospect Theory systematically describes these changing attitudes towards risk: people are either risk seeking or risk averse depending on whether the stakes are conceived as gains or as losses. This in turn depends on whether the potential consequences of choices are states of affair that are better or worse than some reference point—what is considered ‘normal.’
.. The political discourses of the Trump and Brexit advocates have framed the stakes in terms of losses rather than gains. The slogans “Make America great again” and “Take back control” clearly refer to the lost grandeur of the past. This sets the reference point as a lost state that was much better than the current one. Also, fear mongering is by definition talking about the frightening (negative) state in which we find ourselves. All this motivates citizens to favor risky options: the gains, even if they are unlikely, are so strongly desired that they induce discounting the very likely losses.
.. With Trump and Brexit voters, we face people who, perceiving that they have lost something, are willing to take high risks. Economic frustrations cause risk seeking preferences, which contribute to motivating votes for Trump and Brexit.