Now consider a person with the following value function under prospect theory v(z) z 8 when z yen 0 3( z) 8 when z This individual has the following weighting function T(pr) (1 pr)

Question: Now consider a person with the following value function under prospect theory: v(z) = z.8 when z ¥ 0 = -3(-z).8 when z This individual

Now consider a person with the following value function under prospect theory:
v(z) = z.8 when z ‰¥ 0
= -3(-z).8 when z This individual has the following weighting function:

where we set (=.65.
a. Which of the following prospects would he choose?
b. Repeat the calculation but using probabilities instead of weights. What does this illustrate?

T(pr) = + (1- pr)"

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