anomaly: Anomalies are exceptions to standard expectations about events or behavior. In economics, the term anomaly increasingly refers to behavior not in accord with conventional economic theory. For example, people who habitually set their clocks or watches ahead a few minutes are exhibiting anomalous behavior, because economic analysis assumes that rational people never intentionally try to fool themselves.

prospect theory: Prospect theory is a collection of explanations for observed exceptions to standard economic assumptions: (a) that people’s preferences are orderly and conform to a general law of diminishing returns (strictly concave preferences, for those of a mathematical bent), and (b) that human behavior is “rational” in that choices can reasonably be expected to accomplish the decisionmaker’s goals.

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