theory. This is because traditional theory ignores people’s state of mind or feelings, which can influence

behavior. For example, people tend to value a dollar lost more than a dollar gained, even though the amounts

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6 • Self-Check Questions 155

are the same. Similarly, many people over withhold on their taxes, essentially giving the government a free

loan until they file their tax returns, so that they are more likely to get money back than have to pay money on

their taxes.

Self-Check Questions

1. Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either

call her on the land-line phone for five cents per minute or he can drive to see her, at a round-trip cost of

$2 in gasoline money. He has a total of $10 per week to spend on staying in touch. To make his preferred

choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from
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