Unformatted text preview: a. ±ormalize the two assumptions. b. Show that the preference relation derived from maximizing the expec-tation of the function v ( q ) t , where v is a strictly increasing function and v ( q ) > 0 for all q , satisFes the assumptions. c. Show that all preference relations satisfying the above assumptions can be represented by an expected utility function of the form v ( q ) t , where v is a positive and increasing function. Problem 8. ( ±ood for thought ) Consider a decision maker who systematically calculates that 2 + 3 = 6. Construct a “money pump” argument against him. Discuss the argument....
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- Fall '10
- Utility, Peters, preference relation