Chapter 15 Section Reviews 15.3

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. Studies of the greater weight of loss (λ > 1).suggest that there is [___] variability in λ across individuals.

little correct incorrect

a modest amount correct incorrect

substantial correct incorrect

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. Consider a gain lottery with a 50 percent chance of winning $60. Rudy's certainty equivalent is $15, and Newt's certainty equivalent is $30. Plausible values for the utility parameter μ are [___] for Rudy and [___] for Newt.

0.50, 1 correct incorrect

0.80, 0.20 correct incorrect

1, 0.50 correct incorrect

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. Consider a gain lottery with a 50 percent chance of winning $60. Mid's certainty equivalent is $24. A plausible value for the utility parameter μ is [___].

0.50 correct incorrect

0.25 correct incorrect

1 correct incorrect

0.75 correct incorrect

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. Consider a loss lottery with a 50 percent chance of losing $40. Rudy's certainty equivalent is –$10, and Newt's certainty equivalent is –$20. Plausible values for the utility parameter μ are [___] for Rudy and [___] for Newt.

1, 0.50 correct incorrect

0.50, 1 correct incorrect

0.80, 0.20 correct incorrect

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. Use Widget 15.3. Suppose an individual is willing to pay $40 for a 50 percent chance of a $100 gain. The implied value of the utility parameter is μ = [___].

1 correct incorrect

0.50 correct incorrect

0.76 correct incorrect

0.24 correct incorrect

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. Consider an experiment that used the bisection method to test for decreasing sensitivity. The low stimulus is 10 and the high stimulus is 40. We conclude that a subject has decreasing sensitivity if he or she chooses an intermediate stimulus [___].

equal to 25 correct incorrect

greater than 25 correct incorrect

less than 25 correct incorrect