Question 3: Suppose that David evaluates gambles according to prospect theory with #(p) = p and...
Question 3: Suppose that David evaluates gambles according to prospect theory with #(p) = p and a value function J 20.75 ifx>0 v(x) = { 2* (- -)0.75 if x <0. David owns an asset that yields a lottery ($500, :$10,3; -$500,5). If you offer to purchase this asset from David for an amount $z, how large would $z need to be for David to accept your offer?