Agatha is currently on a game show called The Big Wheel. She has progressed to the final round and it's time for her to make the big decision. Does she take the prize money and go home, or take a chance and spin the big wheel?

If she takes the prize money and goes home, she gets $10,000 for certain. She knows that $10,000 is hers if she wants it, and that's where she's starting from for evaluating the wheel.

If she spins the big wheel, she gets $2000 for sure, and then spins the wheel. With the wheel there are a lot of things that could happen:

9.5% chance she wins a light-blue car (she values it at $15,000)

9.5% chance she wins a dark-blue car (she values it at $15,000)

40% chance she gets nothing (aside from the $2000 she already got)

21.9999% chance she wins a goat (she values it at $50)

19% chance she wins $5000

.0001% chance she wins a million dollars

1)How many of these six outcomes will be coded as gains?

2)After combining outcomes, how many prospective outcomes does she still have to evaluate? Assume that getting the goat would be such a letdown that it's basically nothing.

3)Are the $2,000 and the prizes from the wheel likely to be regarded as part of the same thing, or separate prizes?

Select one:

a. It depends on the value function.

b. Evaluated separately

c. No way to tell

d. Evaluated together as the same thing

4)Assume Agatha does probability weighting before simplification. For which of the outcomes is the difference between the actual probability and the probability she acts on the biggest?

Select one:

a. The light-blue car

b. The dark-blue car

c. The million dollars

d. The goat

e. The nothing

f. The $5,000

5)If we ignore probability weighting, then after Simplification, what probability is she likely to assign to the chance of winning a car?