A Comment on ‘A Psychologically Plausible Goal-Based Utility Function’
نویسنده
چکیده
Gill advocated using goal-based utility functions versus the standard commodity-based neoclassical utility function. He argued that a goal-based utility function would resolve many observed inconsistencies between what economics predicts and the behavior observed in psychological experiments. To support Gill’s argument, this paper focuses on the standard extension of neoclassical utility to gambles. Given this extension, it is straightforward to rewrite the neoclassical utility function as a goal-based utility function. This goal-based utility function will correspond to quantities like the Sharpe ratio and effect size already widely used in finance and medicine. As we show, minor adjustments of this formula are mathematically identical to proposed psychological plausible models of human behavior. Finally we show how this formulation can be extended to the case of a goal with multiple sub-goals.
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A Psychologically Plausible Goal-Based Utility Function
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