Thea committed a traffic violation that resulted in an accident. She learns first that the violation will result in a $500 fine; she then learns that she will have to pay another $500 for damage caused in the accident. According to prospect theory,

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According to prospect theory, people experience losses more intensely than gains, but when multiple losses are perceived as a single event, the disutility is less than if they were perceived separately. Thea perceives the $500 fine and $500 damage as separate losses, but the second loss (damage) is less painful because she has already adjusted to the first loss (fine).

Thea Committed a Traffic Violation That Resulted in an Accident