Renee plans a night out at the casino. On the way to the casino, she is pulled over for speeding and gets a $\$ 100$ speeding ticket. She incorporates this into her nightly expenses. Thus, when Renee arrives at the casino, which gamble does prospect theory suggest she'll prefer.

Question

Quizplus · Accepted Answer

Prospect theory suggests that people evaluate potential losses and gains relative to a reference point. After receiving a $100 ticket, Renee may perceive herself as being in a "loss" state. She might prefer the gamble with the potential for the highest gain (option D) to offset her perceived loss, despite its lower probability.

Renee Plans a Night Out at the Casino $100\$ 100$100 Speeding Ticket

Renee Plans a Night Out at the Casino $\$ 100$ Speeding Ticket