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Expected Value and Consumer Choices
Consumers' choices are prey to subtle discrepancies that arise in cognitive accounting. Learning how and when you are prey to these discrepancies is an important step in improving your decision making. People value gains and losses differently under different scenarios.
For example, contestants in a game show might choose a guaranteed $10 prize over a 50 percent chance of winning $20 despite the fact that the expected values are the same.
Using the Internet, address the following:
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