You Have Won a Contest and Are Allowed to Choose

question 58

Essay

You have won a contest and are allowed to choose between two prizes. One prize is $200 today and another $200 one year from now. The other prize is $100 today and an additional $325 one year from now. At what interest rate (if any) would you be indifferent between the two prizes?

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Definitions:

Bodily Sensations

Physical feelings or perceptions resulting from the condition of the body or its parts.

Hypersensitive Fight-Or-Flight

An exaggerated response to stress or perceived threats, where the body's natural fight-or-flight response is more easily triggered or more intense than normal.

Biological Vulnerability

An inherent sensitivity to psychological disorders due to genetic or physiological factors.

Interoceptive Awareness

Sensitivity to stimuli arising from within the body, such as heart rate.