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lecture8 - uncertainty

lecture8 - uncertainty - Topic 4 Consumer Choice(4 Choice...

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Topic 4: Consumer Choice (4) Choice under uncertainty USC Marshall
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Choice under uncertainty So far we have analyzed choice over known (certain) alternatives However, many choices involve uncertainty – Choosing a movie to see – Choosing a restaurant you haven’t tried before – Investing in the stock market – … How can we model choice under uncertainty? – We use the concept of expected utility • Choose what is in expectation most attractive USC Marshall
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