expected utility


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expected utility

[ek′spek·təd yü′til·əd·ē]
(mathematics)
References in periodicals archive ?
He also presented a formulation that accounts for the risk attitude of a decision maker by maximizing the expected utility of a decision.
Browne (1995) made use of Brownian motion with drift to characterize the dynamic process of liquid assets, and studied the insurer's optimal investment under the expected utility.
Under the assumption that expected utility is concave in self-protection and saving, we can utilize Lemma 1 in the Appendix again.
Another alternative, developed by various economists, modifies expected utility in certain ways that make it a bit better - though still not great - at explaining broad financial market movements.
The outsourcer's expected utility is equal to expected profit.
The team manager maximizes her expected utility by choosing the optimal contract:
The objective of the routing decision is to maximize the expected utility of packet delivery with optimized transmit power and retry limit allocation.
Lemenhe Concludes that there are preferences explained by the Expected Utility Theory and that there are preferences explained by the Prospect Theory and that there are preferences that are not explained by the Expected Utility Theory nor by the Prospect Theory.
Based on rational choice theory, this essay approaches these puzzles by analyzing how the expected utility of protesting is affected by the following variables: the probability of having a new government, the probability of getting caught and receiving punishment when protesting, and the expected costs and benefits of doing so.
If within-subjects treatments are to be implemented: (i) paying one decision randomly (POR) is incentive compatible only for expected utility theory; (ii) paying all decisions independently (PAI) at the end of the experiment is not incentive compatible for any decision theory; (iii) paying all decisions sequentially (PAS) is incentive compatible for decision theories defined on income such as cumulative prospect theory and the expected utility of the income model; and (iv) paying all decisions correlated at the end of the experiment (PAC) is incentive compatible for the dual theory of expected utility (Yaari, Econometrica, 1987).
i) the expected utility of an office holder at the beginning of period 2 is given by
Moreover, in the context of an expected utility model, including the additional frictions that we measure has direct implications for risk preference estimates, which are typically assumed to be the only source of persistent unobserved preference heterogeneity in such models.