Consider the following prospects and calculate the utilities of each prospect according to what Kahneman and Tversky
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Question:
Consider the following prospects and calculate the utilities of each prospect according to what Kahneman and Tversky propose in prospect theory. Show your calculations.
P1 (0.01, $1,000,000) and P2 (1.0, $10,000).
Assume γ = 0.60 and α = 0.85. Use V(z).
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