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Consider a person with zero initial wealth and the following value function under prospect theory: v(w) = w0.5 if w>=0; v(w) = -2.25(-w)0.5 if w<0. Assume the individual weights values by probabilities, instead of using a prospect theory weighting function. Which of the following prospects (probability of gain, gain, loss) would the individual reject? P1(0.5, 1200, -250); P2(0.5, 7500, -1000); P2(0.25, 1000, -50)
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