The Kahneman-Tversky value function provides a rationale for
A)Putting several Christmas gifts in one big box for your special friend
B)Paying cash rather than using a credit card
C)Requiring employees to take all their vacation days in two weeks rather than taking scattered days throughout the year
D)Car dealers offering rebates rather than a price reduction on a car

Question

Quizplus · Accepted Answer

The Kahneman-Tversky value function suggests that people tend to be risk-averse when it comes to gains (they prefer certain gains over uncertain gains) and risk-seeking when it comes to losses (they prefer uncertain losses over certain losses). Offering a rebate rather than a price reduction on a car is a way for car dealers to frame the discount as a gain (you get money back) rather than a price reduction (you're losing money upfront). This may appeal to customers' risk-averse nature when it comes to gains.

The Kahneman-Tversky Value Function Provides a Rationale for