According to the course textbook, Financial Counseling, Prospect Theory (Kahneman & Tversky, 1979) includes the concept of people feel pain of loss and feel good when they gain. Which of the following is not a factor of Prospect Theory?

1.Losses hurt twice as much as gains feel good.

2.Individuals make financial decisions by comparing outcomes to an arbitrary reference point.

3.Financial counselors can have a powerful influence on the reference point.

4.All of these are factors of Prospect Theory.