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QUESTION
(Disappointment Aversion) Assume that Kyle is offered a gamble with 50% chance to win $250 and 50% chance to lose $100.
(Disappointment Aversion) Assume that Kyle is offered a gamble with 50% chance to win $250 and 50% chance to lose $100. Assume that he is risk-neutral (u(x) = x) and his disappointment coefficient β is 1.5. Using disappointment theory, what would Kyle choose among the following options:
