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Utility in Prospect Theory
- Sketch the Utility Curve in Prospect Theory (3 points)
- What are the three main features of this curve and how do they relate to behavior (3 points)
- What is the main reference point in the Utility Curve for Prospect Theory? (1 point)
- How can this reference point help us to understand the shape of the utility curve for gains and losses? (2 points)
- What property of the Utility curve can not be explained by the reference point? (1 point)