Question
Consider a person with the following value function under prospect theory: v ( w ) = w .0.3 if w 0 =-2(- w .)0.3 if
Consider a person with the following value function under prospect theory:
v(w) =w.0.3ifw0
=-2(-w.)0.3ifw< 0
Assume that this individual weight values by probabilities, instead of using the prospect theory weighting function. What is the value of the following prospect?
P1 (0.7, 1000, -800)
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Basic Finance An Introduction To Financial Institutions, Investments, And Management
Authors: Herbert B. Mayo
12th Edition
1337691011, 978-1337691017
