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2. A person is offered the following choice: Option A is a 25% chance of winning $16 and a 75% chance of winning $64. Option

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2. A person is offered the following choice: Option A is a 25% chance of winning $16 and a 75% chance of winning $64. Option B is receiving $52 for sure. Assume the consumption utility of money is described by the equation u(x) = x1/2. a. Use standard expected utility to determine which choice the person will make. b. Now use our model of reference-dependent preferences, assuming n = 1 and 2 = 2, to determine which choice the person will make

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