Identify the correct statements.
Statement 1: In decision-making under uncertainty, the expected utility theory assumes that individuals evaluate risky prospects based on the expected outcome.
Statement 2: In a risk-neutral setting, individuals value uncertain prospects based only on the probabilities of outcomes, disregarding their utilities.
1
Both statements are true
2
Both statements are false
3
Statement 1 is true, Statement 2 is false
4
Statement 1 is false, Statement 2 is true