Add the word "Algorithm" before each entry in the List of Algorithms

The following piece of code will insert Algorithm~ before each number of the algorithm in the List of Algorithms (LoA):

\begingroup
\let\oldnumberline\numberline
\renewcommand{\numberline}{Algorithm~\oldnumberline}
\listofalgorithms
\endgroup

It redefines the \numberline macro that inserts and sets the algorithm number into the LoA. For a good discussion on the meanings and placement/usage of these macros, read the tocloft package documentation (section 1.1 LaTeX's methods). Bracing (or grouping using \begingroup...\endgroup) localizes the scope so it does not affect \numberline used by other contents structures. Here's the full code that redefines \listofalgorithms so it can be cleanly used inside your document body:

\documentclass{book}
\usepackage[breaklinks]{hyperref}
\usepackage{algorithm,algorithmic}

\let\oldlistofalgorithms\listofalgorithms
\renewcommand{\listofalgorithms}{%
  \begingroup%
  \let\oldnumberline\numberline%
  \renewcommand{\numberline}{Algorithm~\oldnumberline}%
  \oldlistofalgorithms%
  \endgroup}
\begin{document}

\listofalgorithms

\chapter{Sample}
% Outline
\begin{algorithm}[!hbt]
  \centering
  \caption{Optimization}\label{alg:pso}
  \begin{algorithmic}[1]
    \STATE \textit{GenerateInitialPopulation}(pop)
    \FOR {particle $ \leftarrow $ 1 \textit{to} numParticles}
      \STATE \textit{Evaluate}(particle)
    \ENDFOR
  \end{algorithmic}
\end{algorithm}

\end{document}

If you wish to avoid the horizontal space introduced between the margin and the algorithm contents entries, you can use the following redefinition of \listofalgorithms:

\makeatletter
\renewcommand{\listofalgorithms}{%
  \begingroup%
  \let\oldnumberline\numberline%
  \let\old@dottedtocline\@dottedtocline
  \renewcommand{\@dottedtocline}[5]{\old@dottedtocline{##1}{0pt}{##3}{##4}{##5}}%
  \renewcommand{\numberline}{Algorithm~\oldnumberline}%
  \oldlistofalgorithms%
  \endgroup}
\makeatother

The above update of \@dottedtocline changes the default 1.5em spacing usually placed in the second argument with 0pt.