In what way does prospect theory differ from the standard theory of expected utility?
a. With prospect theory, preferences depend only on final wealth levels.
b. With prospect theory, preferences vary with initial (reference) wealth levels.
c. With prospect theory, individuals are risk loving over small losses.
d. With prospect theory, risk aversion does not play a role.
b
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During a recession, people drop out of the labor force because they are unable to find a job. All else the same, this
A) increases the official U-3 unemployment rate. B) decreases the official U-3 unemployment rate. C) does not change the official U-3 unemployment rate. D) increases the official U-3 unemployment rate and the labor force participation rate.
People who lost their jobs as hand-drawn animators because of the popularity of computer-generated 3D animation are examples of persons who are suffering
A) cyclical unemployment. B) frictional unemployment. C) seasonal unemployment. D) structural unemployment. E) unnatural unemployment.