imagine it this way…in the area of losses the guy is a degenerate gambler putting coins in the slot machine despite having lost loads of money already , believing in that big payoff someday…in the area of gains the guy is like your grandma, if she finds 2$ on the floor she will be happy for a year…
The question would have been consistent with prospect theory if the client :
[a] Sold the 15 % gain position (because he is risk averse over gains) = grandma
[b] Continue investing in the 25% loss position (because he is risk loving over losses) = Gambler.
…i think, |