Question: Silver linings For this question, suppose your value function is v(x)5 !x/2 for gains and v(x)5 22!0x0 for losses. Last night, you lost $9 in

Silver linings For this question, suppose your value function is v(x)5 !x/2 for gains and v(x)5 22!0x0 for losses. Last night, you lost $9 in a bet. There was a silver lining, though: on your way home, you found $2 lying on the sidewalk.

(a) If you integrate the loss and the gain, what is the total value?

(b) If you segregate the loss and the gain, what is the total value?

(c) From the point of view of value, is it better to integrate or to segregate?

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