Simply assume that the probability weighting function is t (p) p for any pe 0, 1 Suppose Albert, Bob, and Charlie have the same value function v($z) 3D 2V r 0 Consider the following two prospects Prospect A ($2, 1) Prospect B ($3,0 5 $1,0 5) 1 Albert takes his endowment before choosing the two prospects as his reference point Which prospect would he prefer according to the prospect theory 2 Bob takes the worst possible outcome from the two prospects as his reference point Which prospect would he prefer according to the prospect theory 3 Charlie takes the best possible outcome from the two prospects as his reference point Which prospect would he prefer according to the prospect theory

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Simply assume that the probability-weighting function is t (p) = p for any pe [0, 1]. Suppose Albert, Bob, and Charlie have the same

Simply assume that the probability-weighting function is t (p) = p for any pe [0, 1]. Suppose Albert, Bob, and Charlie have the same value function: v($z): %3D -2V- r

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