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Mathematics, 25.12.2020 16:20 chelsearodi3985

Is someone who acts as described in prospect theory always more or always less likely to take a given gamble than someone who acts as described by expected utility theory? Why? Are there conditions, such as on the weights, where you can answer this question definitively? Consider risk-averse individuals. Assume is the probability of losing $A in a gamble and (1) is the probability of gaining $B in a gamble and w() is the decision weight for the outcome of losing $A and w(1) is the decision weight for the outcome of gaining $B. Compared to someone who acts as described by expected utility theory, someone who acts as described in prospect theoryLOADING... A. will be more likely to take a gamble if . B. will always be more likely to take a gamble if w(). C. may or may not be more likely to take a gamble because but how they are weighted . D. will never be more likely to take a gamble if w(1)(1). E. may or may not be more likely to take a gamble because both the valuation of outcomes and how they are weighted may differ.

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