Behavioral economics

Suppose that your value function is v(x)=x/3 for gains and v(x)=2x for losses. (a) What does your value function look like graphically?

(b) Your friend the forgetful kitty promised you a $60 movie voucher on your birthday a week ago. In terms of value, how much did you gain?

(c) The forgetful kitty gave you a $40 movie voucher on the date of your birthday, and you felt disappointed. In terms of value, how much did you just lose?

(d) What is the net gain or loss of the whole sequence of events?

(e) Draw a graph that illustrates how you would be happy if you did not expect a $60 movie voucher from the forgetful kitty, but felt disappointed because you took her promise seriously.