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Two investors, where 1 is risk neutral and 2 has prospect theory preferences (risk averse over gains and risk seeking over loses). Two investment options:
Two investors, where 1 is risk neutral and 2 has prospect theory preferences (risk averse over gains and risk seeking over loses). Two investment options: holding cash at 0% interest or invest in market index.
Total utility is derived as u(rt) and t = the times investor look at their portfolio (once a week)
What would be the utility of investor 1 investing in the market index?
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