Which of the following is a valid characteristic of the value function?
A) The shape of the value function does not change at the reference point.
B) The value function is noticeably steeper for losses than for gains.
C) At some focal amount of the pertinent outcome, negotiators consider larger amounts as losses and smaller amounts as gains.
D) The shape of the value function remains constant for an individual.

Question

Quizplus · Accepted Answer

The value function, as described by prospect theory, is steeper for losses than for gains, indicating that losses loom larger than gains. This reflects the psychological principle of loss aversion.

Which of the Following Is a Valid Characteristic of the Value