Consider that Kim has a choice among the following prospects
Gamble A: Gamble B:
$60 with probability 0.24 ...........................$65 with probability 0.25
$33 with probability 0.24 ...........................$30 with probability 0.25
$0 with probability 0.52 ..............................$1 with probability 0.50
a. Rewrite these gambles after applying each of the steps of the editing phase. Does the result depend upon the order in which you apply these steps?
b. Calculate the value of both gambles using the cumulative prospect theory functions estimated by Tversky and Kahneman and appearing in equations 10.6 and 10.7, including their parameter estimates. Which gamble would the model predict would be chosen? Does this depend on the order of the steps applied in editing?