Suppose preferences can be represented by PT with weighting functions p (pc + (1 - p)c)/c pd (pd + (1 - p)d)1/d and value function. w+ (p) = w (p) v(x) = = = [a", 1-X (-x) , x 0 x < 0. consider the prospect (0.01, 80; 0.35, 60; 0.35, 30; 0.29, -30). (a) Assume PT with c = 0.61, d = 0.69, 0 = 0 = 0.88 and A = 2.25. Calculate the risk premium of the prospect. (b) Assume EU. That is, probability weighting is linear (c= d =1). Further, 00' 0.88 and X = 1. Calculate the risk premium of the prospect. = (c) Assume RDEU with linear utility. That is, 0 = 0 = 1, c = 0.61 with one weighting function w, and = 1. Calculate the risk premium of the prospect. (d) Assume PT with linear utility and no loss aversion. That is, 0 = 0 = 1, and X 1. For comparison with part c, we take cd = 0.61. Calculate the risk premium of the prospect. = (e) Assume PT with only loss aversion effective; i.e., 0 = 0 = 1, c= d = 1, and A = 2.25. Calculate the risk premium of the prospect.