You specifically said people are motly innumerate - that is what I pulled that risk manager apartat and what Prospect Theory never says. If you follow through on Prospect Theory ( and I did I studied it as part of work in The City) you will see if prospective gains are large enough it completely
Flips and people become less risk averse - its how con artists capture a mark. It is also documented the more experoenced someone becomes with the risk / reward scenario the more rational and objective they become. You literally blindly repeated 'people are mostly innumerate' which to paraphrase
Gillian Tett, is complete bollocks