Ex. 3*

Suppose there are two PT decision makers with the same weighting funct and with the same value function, except for the loss aversion parameter, s.

2/2

A2 > A1 > 1.

Assume that there are two lotteries x and y, where x is a mixed lottery and y is a pure loss lottery, pick such that y~1.

Which lottery will the second decision maker prefer?

Ex. 3 Suppose there are two PT decision makers with the same weighting funct 2/2 and with the same value function, except for the loss aversion parameter, s.. 2>1>1. Assume that there are two lotteries x and y, where x is a mixed lottery and y is a pure loss lottery, pick such that y1x. Which lottery will the second decision maker prefer? Ex. 3 Suppose there are two PT decision makers with the same weighting funct 2/2 and with the same value function, except for the loss aversion parameter, s.. 2>1>1. Assume that there are two lotteries x and y, where x is a mixed lottery and y is a pure loss lottery, pick such that y1x. Which lottery will the second decision maker prefer