Question: .. 3. Consider two prospects. Problem 1: Choose between Prospect $2,500 with A: probability 0.33 $2,400 with probability 0.66 Zero with probability 0.01 Prospect $2,400

.. .. 3. Consider two prospects. Problem 1: Choose between Prospect $2,500 with

3. Consider two prospects. Problem 1: Choose between Prospect $2,500 with A: probability 0.33 $2,400 with probability 0.66 Zero with probability 0.01 Prospect $2,400 with B: probability 1.00 Problem 2: Choose between Prospect C: $2,500 with probability 0.33 Zero with probability 0.67 Prospect D: $2,400 with probability 0.34 Zero with probability 0.66 It has been shown by Daniel Kahneman and Amos Tversky (1979, "Prospect theory: An analysis of decision under risk," Econometrica 47(2), 263-291) that more people choose B when presented with problem 1 and when presented with problem 2, most people choose C. These choices violate expected utility theory. Why

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