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2 Reference Point Tyler has loss averse preferences. In particular, Tyler values a gain of amount :r as u(a:) = sci and values a loss of ..~: as u(a:) = 2|:c|%. You can think of Tyler as having Prospect Theory preferences with a reference point of zero. (a) What is the maximum amount of money that Tyler would pay for a lottery that pays $512 with probability % and $0 with probability %? You must show the reasoning behind your answer to get credit. (b) What is the maximum amount of money that Tyler would pay to avoid playing a lottery that loses $512 with probability % and loses $0 with probability {3 You must show the reasoning behind your answer to get credit. (c) Suppose instead that Tyler values a gain of amount .1: as u(:r) = mi and values a loss of m as u(:r) = |x|%. How would your answers to part (a) and (b) change