Question

QUESTION 1 What does prospect theory say about how we experience gains and losses?

A We regard losses as roughly equally important as gains of comparable magnitude.

B We regard losses as considerably more important than gains of comparable magnitude.

C We regard gains as considerably more important than losses of comparable magnitude.

D We have inconsistent attitudes (noise) with respect to gains and losses.

QUESTION 3

1. How do humans make decisions under classical economics

   		Ethically, fairly and empathetically
   		Using system one
   		Using heuristics (rules of thumb)
   		Like a computer

What is behavioral economics?

		Discipline that combines insights from economics and psychology to understand decision-making
		Discipline that examines the economic behaviors of rational actors
		Branch of classical economics that deals with consumer and firm decision-making
		Branch of economics that examines games like the Prisoners' Dilemma

A person is said to be boundedly rational if:

		She is always able to make the best decision, regardless of the number of options to choose from
		She is able to assess only some of the possible feasible solutions to a problem
		Her decisions are always self-interested, omniscient, deliberate and optimal.
		She is able to assess all the possible feasible solutions to a problem

Match the linear programming concepts to the corresponding Solver parameters

-       A.       B.       C.    Objective Function       -       A.       B.       C.    Decision Variables       -       A.       B.       C.    Constraints

A. Decision Constraints B. By Changing Variable Cells C. Set Objective

Answer 1

ANS-) Option C is correct. We regard gains as considerably more important than losses of comparable magnitude.

Explanation- It is called risk aversion. If two choices is given to anybody and both has the equal magnitude or value. In this case people will always prefer that value which has probability of having gain, will not opt the one with loss probability.This is the Theory of Prospect.

Other options are wrong because gain is considered more important.