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In light of the prospect theory as an alternative model for the expected utility theory for decision making under risk, you have a choice between
In light of the prospect theory as an alternative model for the expected utility theory for decision making under risk, you have a choice between the following prospects: A: 80% chance of losing $4,000 B: a 100% chance of losing $3,000 1) Based on expected utility theory, a rational investor should select B 2) According to the prospect theory, investors are most likely to select A Now between these two prospects C: an 80% chance of winning $4,000 D: a 100% chance of winning $3,000 3) Based on expected utility theory, a rational investor should select 4) According to the prospect theory, investors are most likely to select 5) According to your answers in 2 and 4 above, effect explains this behaviour D isolation reflection | certainty
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