« Q & A Pictures | Main | Progress Reports »

March 08, 2005

Utility-Based Valuation of Risk

P3080090a.jpg

Critical Assumption: Agents care about expected utility, not expected dollars.

P3080093a.jpg

A path not taken: log utility. While mathematically elegant, the log function makes working with zero dollars difficult, is not found on as many calculators as is the square root function, and does not lend itself to lectures sans calculator.


P3080094a.jpg

Posted by bparke at March 8, 2005 10:18 PM

Comments