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Chapter 3 Attitudes Towards Risk - MIT OpenCourseWare

Chapter 3 Attitudes Towards Risk - MIT OpenCourseWare

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most areas of modern economics. 3.1 Theory. Take the set of alternatives as X = R which corresponds to the wealth level of the decision maker. The decision maker has an increasing von Neumann-Morgenstern utility function u : R → R, representing his preferences over the lotteries on his wealth level.

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