Question: b. Suppose that people use reference-based preferences to evaluate outcomes when making their choice between gambles. Why might the most reasonable reference point in the

b. Suppose that people use reference-based preferences to evaluate outcomes when making their choice between gambles. Why might the most reasonable reference point in the choice between G1 and G2 be $1 million while the most reasonable reference point in the choice between G3 and G4 is $0?

c. Can you explain how such reference-based preferences might explain the Allais paradox?

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