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4. (Prospect Theory) This question asks you to think about the mug experiment discussed in...

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4. (Prospect Theory) This question asks you to think about the mug experiment discussed in class in terms of actual utility functions. Let two dimensions of choice be mugs and money, with mugs being dimension 1 and money being dimension 2. Denote outcomes in mugs and money by c1 and c2, respectively, and reference points in the two dimensions by r1 and r2, respectively. The person's utility is given by 4c7 + C2 + v(4c1 - 4r,) +v(c2 - rz) where v(x) = 0.5x for x > 0, and v(x) = 2x for x 0, and v(x) = 2x for x

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