No, though I was using 10 utiles as shorthand for “an event that, were it to occur, would give you 10 utiles”. So without that shorthand it would be something like:
Let A and B be two future states and assume without loss of generality that U(A) = 0 utiles and U(B) = 10 utiles. Then if U(10% chance of B, 90% chance of A) < 1 utile.
But that would have been ugly in the context.
a utility function where U(10% chance of 10 dollars) < U(1 dollar)
This could be the same utility function that I am talking about, but it could also be one of a risk neutral agent with a diminishing marginal utility for money.
This could be the same utility function that I am talking about, but it could also be one of a risk neutral agent with a diminishing marginal utility for money.
Those are intimately-linked concepts, as I understand it:
Quantified utility models simplify the analysis of risky decisions because, under quantified utility, diminishing marginal utility implies “risk aversion”.
No, though I was using 10 utiles as shorthand for “an event that, were it to occur, would give you 10 utiles”. So without that shorthand it would be something like:
Let A and B be two future states and assume without loss of generality that U(A) = 0 utiles and U(B) = 10 utiles. Then if U(10% chance of B, 90% chance of A) < 1 utile.
But that would have been ugly in the context.
This could be the same utility function that I am talking about, but it could also be one of a risk neutral agent with a diminishing marginal utility for money.
Those are intimately-linked concepts, as I understand it:
http://en.wikipedia.org/wiki/Marginal_utility#Revival