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Suppose You Win $10 Million in a Lottery

question 46

Essay

Suppose you win $10 million in a lottery. You have a choice of how you will receive your winnings. The first choice is to receive a certain lump sum today. The second choice is to receive a certain amount at the end of five years. How will you evaluate your choices to make your decision?


Definitions:

Temporal Discounting

The devaluation of future rewards or outcomes in favor of immediate benefits, reflecting an individual's preference for short-term gratification.

Certainty Effect

The tendency for people to give greater weight to outcomes that are certain, compared to outcomes that are only probable.

Self-Determination Theory

A theory of motivation that emphasizes the role of innate psychological needs in the development of personal growth and psychological well-being.

Autonomy

The capacity to make an informed, uncoerced decision independently. In personal context, it refers to self-governance or the right to self-direct one's life.

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