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Suppose that v(x) =x and v(x) = 2x for positive x > 0. Let (0.001) = 0.005 and (0.999) = 0.995. According to the prospect

Suppose that v(x) =x and v(x) = 2x for positive x > 0. Let (0.001) = 0.005 and (0.999) = 0.995. According to the prospect theory, what is the maximum price that this person is willing to pay to insure a $2000 TV set that breaks down with probability 0.001? Assume that TV is registered as a $2000 loss if it breaks down, and the insurance price is asure loss.

(A) $2;

(B) $4;

(C) $8;

(D) $10.

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