According to prospect theory, which is preferred?;1. Prospect A or B;Decision (i) Choose between;A. (.80, $50, $0);B. (.4, $100, $0);2. Prospect C or D?;Decision (ii) Choose between;C. (.00002, $500,000, $0) and;D. (.00001, $1,000,000, $0);3. Are these choices consistent with expected utility theory? Why or why not?;5-3: Rex is a smart fellow. He gets an A in a course 80% of the time. Still, he likes his leisure, only studying for the final exam in half of the courses he takes. Nevertheless, when he does study, he is almost sure (95% likely) to get an A. Assuming he got an A, how likely is it he studied? If someone estimates the above to be 75%, what error are they committing? Explain
Prospect Theory and Expected Utility Theory Questions
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