Prospect theory, developed by Kahneman and Tversky

The theory states we have an irrational tendency to be less willing to gamble with profits than with losses

Most people choose option 2 in situation 1 and option 1 in situation 2, although the expected values in both options (in both situations) are equal.

Siegel’s Paradox

[P(1-x)] (1+x) = P(1-x^2) < P   

[P(1+x)] (1-x) = P(1-x^2) < P

It does not matter whether you win x% first and lose x% later or vice-versa, in both cases you end up losing money. Infact do this repeatedly and you will go broke.