A theory of investor choice - mix of positive and normative

No different than the view of Nobel prize winning professor Thaler in his famous paper "Towards a positive theory of consumer choice", a theory of investor choice is a combination of positive and normative views. There is the rational maximizing model which describes how investors should choose, and then there is the descriptive model of how investors actually choose. We must accept a description of investors is a combination of both. We are not pure rational, and we are not just a behavioral mess. We switch between the two. We strive to be rational but will fail based on our broad set of biases.

For example, there is prospect theory which is a good way to describe how investors act even though it is not what we would expect from a rational maximizing model.  Our behavior in up (winning) markets may differ from our behavior in down (losing) markets. This should not be expected in a rational model, but it is reality. Reality must be accounted for in our thinking and the thinking of others. If we only think about a rational choice world, we will fail. If we only think about a positive world, we will also fail if that world changes.