Although the link between risk aversion and diminishing marginal utility of wealth is academically well established, theoretical discussions concerning its empirical validity remain. The presented, review-type paper aims to briefly examine roots responsible for different views on this association in order provide a broader perspective alternative explanations. This latter task assisted by compa...

Despite extensive studies, the nature of risk attitudes remains a vigorously discussedquestion in economics and psychology. In expected utility theory, attitudes towardsrisk originate from changes in marginal utility. Cumulative prospect theory (CPT)adds an additional dimension: the weighting of probabilities. By examining bothdimensions, we strive to gain more insight on the re...

This paper develops a theory of choice under risk and uncertainty which, together with the associated definition of risk aversion, separates the concepts of risk aversion and diminishing marginal utility from each other. Building on separate definition of the decision maker’s two elementary preference relations—preferences over lotteries and preferences over consequences—and a set of consistenc...

Recently, Brafman and Engel (2009) proposed new concepts of marginal and conditional utility that obey additive analogues of the chain rule and Bayes rule, which they employed to obtain a directed graphical model of utility functions that resembles Bayes nets. In this paper we carry this analogy a step farther by showing that the notion of utility independence, built on conditional utility, sat...

to evaluate the influence of core thickness and fabrication stages on the marginal accuracy of ips e.max press crowns.twenty ips e.max press crowns, 1.5mm thick, were fabricated on metal dies. the crowns had two different core thicknesses, 0.8mm for group a and 1mm for group b, ten for each group. marginal gap was measured after each stage of core fabrication, veneering and glaze firing. the sp...

This paper studies stability of the exponential utility maximization when there are small variations on agent’s utility function. Two settings are considered. First, in a general semimartingale model where random endowments are present, a sequence of utilities defined on R converges to the exponential utility. Under a uniform condition on their marginal utilities, convergence of value functions...

As a serious concern in data publishing and analysis, privacy preserving data processing has received a lot of attention. Privacy preservation often leads to information loss. Consequently, we want to minimize utility loss as long as the privacy is preserved. In this chapter, we survey the utility-based privacy preservation methods systematically. We first briefly discuss the privacy models and...

Modern portfolio theory(MPT) addresses the problem of determining the optimum allocation of investment resources among a set of candidate assets. In the original mean-variance approach of Markowitz, volatility is taken as a proxy for risk, conflating uncertainty with risk. There have been many subsequent attempts to alleviate that weakness which, typically, combine utility and risk. We present ...

Assumptions • There is a continuum of types; specifically, a consumer’s type, θ, is an element of the real interval [θ0, θ1]. • Marginal cost is a constant, c. • Because marginal cost is a constant, there is no loss of generality in considering a single consumer whose type is drawn from the distribution F (·) : [θ0, θ1]. • Assume F (·) is differentiable. Let f(·) be the derivative (the density ...