Problem
Imagine that you collect bottles of wine as a hobby. How would you react to these situations?
a. You have just learned that one of the bottles (Wine A) that you purchased five years ago has appreciated considerably. A friend has offered to buy the bottle from you for $100. His offer is a fair price. Would you sell the bottle of wine?
b. A second bottle of wine (Wine B) is viewed by experts as being equivalent in value to Wine A. You never purchased a bottle of Wine B, but a casual acquaintance did. In conversation at a party, he offers to sell you his bottle of Wine B for $100. Would you buy it?
Many people would neither sell Wine A nor buy Wine B. Explain why this pattern of choices is inconsistent with expected utility. What other considerations might be taken into account?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.