Question: 3. Consider a person with the following value function under prospect theory: v(w)=w.5 when w>0=-2(-w).5 when w <0a.Is this individual loss-averse? Explain. b. Assume that

3. Consider a person with the following value function under prospect theory: v(w)=w.5 when w>0=-2(-w).5 when w<0a.Is this individual loss-averse? Explain. b. Assume that this individual weights values by probabilities, instead of using a prospect theory weighting function. Which of the following prospects would be preferred? P1(.8,1000,-800)P2(.7,1200,-600)P3(.5,2000,-1000)Consider a person with the following value function under prospect theory:v(w)=w5 when w>0=-2(-w)5 when w<0a.Is this individual loss-averse? Explain.b. Assume that this individual weights values by probabilities, instead ofusing a prospect theory weighting function. Which of the following prospectswould be preferred? P1(.8,1000,-800) P2(.7,1200,-600) P3(.5,2000,-1000)

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