Before revision: Consider two scenarios; 100% chance to gain 450 or 50% chance to gain 1000 100% chance to lose 500 or 50% chance to lose 1100 Prospect theory suggests that ; When faced with a risky choice leading to gains agents are risk averse, preferring the certain outcome with a lower expected utility (concave value function).
After revision: Consider two scenarios; 100% chance to gain 450 or 50% chance to gain 1000 100% chance to lose 500 or 50% chance to lose 1100 Prospect theory suggests thatt ; When faced with a risky choice leading to gains agents are risk averse, preferring the certain outcome with a lower expected utility (concave value function).