The Present Value of a Lottery Received as an Annuity

question 69

True/False

The present value of a lottery received as an annuity due is less than the present value of a lottery whose cash flows are received as an ordinary annuity.(Assume that the interest rate used to discount the cash flows is positive and equal between the two choices and that the magnitude and number of cash flows are equal for the two choices.Only the timing of the cash flows differs between the two choices.)

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Definitions:

Law of Effect

A psychological principle suggesting that behaviors followed by favorable consequences become more likely, and behaviors followed by unfavorable consequences become less likely.

Skinner

B.F. Skinner was an influential American psychologist known for his research in behaviorism and for developing the theory of operant conditioning, focusing on the consequences of actions to modify behavior.

Operants

Behaviors that are controlled or modified by their consequences, such as rewards or punishments, in the context of operant conditioning.

Reinforcers

Stimuli that, when presented after a behavior, increase the likelihood of that behavior occurring again in the future.