Using the model of disappointment with = 0.002, consider the following three prospects: A = (0.5,

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Using the model of disappointment with θ = 0.002, consider the following three prospects: A = (0.5, $2,400; 0.5, $0), B = (0.7, $2,400; 0.3; $0), and C = (0.3, $2,400; 0.7; $0). Work out the utility of each prospect and comment on the result.

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Behavioral Economics

ISBN: 9780415737616

2nd Edition

Authors: Edward Cartwright

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