Linda 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 perceive losses and gains differently. When losses are perceived separately, the disutility is less than when they are perceived as a single larger loss. Since Linda learns about the two $500 payments separately, she will suffer less disutility from the second payment than if she had learned about both payments at once.

Linda Committed a Traffic Violation That Resulted in an Accident