Now consider a person with the following value function under prospect theory v(z) z 8 when z yen 0 3( z) 8 when z This individual has the following weighting function T(pr) (1 pr) ...

a PA001 5000 PB5 Compare the value of each prospect VPA 9830 391028011 3015 note use ...

Now consider a person with the following value function under prospect theory: v(z) = z.8 when z

Question:

Now consider a person with the following value function under prospect theory:
v(z) = z.8 when z ‰¥ 0
= -3(-z).8 when z This individual has the following weighting function:

where we set (=.65.
a. Which of the following prospects would he choose?
b. Repeat the calculation but using probabilities instead of weights. What does this illustrate?