The quiz Daniel Kahneman wants you to fail

They don't: https://en.wikipedia.org/wiki/Expected_utility

In short, there are three types of people: risk-averse, risk-neutral, and risk-preferring. (In the general case, people can exhibit all three types of behavior at different income levels, but let's keep things simple).

Imagine a graph, with income on the x-axis and utility on the y-axis. A risk-averse person will have a concave utility function (like a square-root function), whereas a risk-netural and risk-preferring person would have a straight-line and a convex utility function, respectively.

You have two income levels: $0 and $1000. Now take the two points (0, U(0)) and (1000, U(1000)) and connect them with a straight line. Since we're dealing with a 90% chance = .9 probability, find the point on that line which is 90% of the way between the two points (closer to the second point). This point represents the utility received from the risky situation, or the expected utility. This is not the same thing as the utility of the expected value! Call this point A, with coordinates (Ax and Ay)

Compare U(Ax) this with the value U($900).

For a risk-neutral person, the two values will be exactly the same, as the utility function is a straight line. For a risk-averse person, the second value will be higher, as the utility function is concave with respect to the origin. For a risk-preferring person, the first value will be higher, as the utility function is convex with respect to the origin.

In practice, the utility function may not have a constant concavity, which explains why people buy insurance (which is only justified under risk-averse behavior) yet also buy lottery tickets or gamble at casinos (which is only justified under risk-preferring behavior).

> Who in their right mind would take the choice that could possibly leave them without a life-changing sum the next day?

As you can see, the answer to your question is, 'A person who is risk-preferring' (or operating under risk-preferring situations which are quite common in practice).

First, I don't see an obvious need for theaters to keep track of who purchased tickets--save the case of online transactions obviously. Granted, the whole example is contrived--but I don't see the utmost need for it.

And, even if they had a moral imperative to do so and didn't, this would mostly affect people--by definition--who purchased a ticket already, and either lost it or want to return it or something of that nature. It is safe to assume few people lose their tickets and of those that do, not all of them protest by not buying another one. Protests are usually only effective if they hurt the company in terms of reputation or money. Since that is unlikely (given the vague probabilities I mentioned and specially because you already paid for one ticket), your protest will most likely be in vain.

We could of course get into a philosophical debate over the worth of such protest, but this is neither the time or place. Protesting the theater record-keeping policies in the way you mention and for the reasons you mention would probably be, in my opinion and with all the information you provided, rationally irrational.

http://joshua.schachter.org/2008/09/amateur-economist.html

People's behavior changes at the dollar price, too. $900 is different from $9 is different from $90000.

Then why don't politicians say "Employment rates are at 91%" instead of the depressing "Unemployment rates are at 9%"?