expected utility


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expected utility

n
(Statistics) statistics the weighted average utility of the possible outcomes of a probabilistic situation; the sum or integral of the product of the probability distribution and the utility function
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The approach then extends the a priori belief across a random field of events in order to evaluate the expected utility and value of information that maximizes the decision.
He discusses behavioral neuroscience research on the topic and examines various models of conflict, including interest-based approaches, a model that synthesizes behavioral neuroscience and interest-based explanations, the rank dependent expected utility model, and an agent-based model, and addresses the role of economic conditions and examples of civil wars.
Due to the application convenience of the stochastic optimal control method and the availability of optimal investment strategies under expected utility, the study of dynamic asset portfolio selection under expected utility has been the mainstream of modern finance in the past five decades.
The individual is risk averse (u' > 0, u" < 0) and maximizes expected utility over both periods: (9)
John von Neumann, the pioneering mathematician and physicist, took a crack at it back in 1944, when he developed the theory of expected utility along with Oskar Morgenstern.
Through the analysis of the enterprise, the community-based crowdsourcing business innovation scheme can obtain higher quality and can bring about higher expected utility for enterprises.
If the contract is signed, the cyclist chooses a training and a doping level, which is not observable by the team manager, in order to maximize his expected utility.
Since the actual benefit or energy cost cannot be obtained before making the routing decisions, expected utility (EU) is used as the metric instead, which equals the expected benefit minus the expected cost.
The Modern Theory of Finance's theoretical framework, based on the precepts of Neoclassical Economic Theory, assumes that economic subjects make decisions with unlimited rationality, present risk aversion and aim to maximize expected utility at every decision made.
Based on rational choice theory, this essay develops a theoretical approach to explain how an individual's expected utility of protesting is affected by the probability of having a new government, together with the expected costs, expected benefits, and the probability of retributive consequences for protesting.
Holt (American Economic Review, 1986) argued that, given the axiom of reduction of compound lotteries, randomly selecting one choice for payoff is incentive compatible only for expected utility theory; it is not incentive compatible for alternative theories such as cumulative prospect theory or rank dependent utility theory.
The expected utility of voter i, evaluated at the beginning of the game, is given by the discounted sum of the benefits from the public project plus the benefits from consumption.