Unformatted text preview: satisfying vNM assumptions). (See Fg. 9.3.) Claim: If both % 1 and % 2 are preference relations on L ( Z ) represented by increasing and continuous vNM utility functions, then the three deFnitions are equivalent. Proof: • If (2), then (1). Assume (2). Then, if p % 1 [ c ] , it has to be that [ CE 1 ( p ) ] % 1 [ c ] and thus CE 1 ( p ) ≥ c , which implies also that CE 2 ( p ) ≥ c , that is, p % 2 [ c ] ....
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- Fall '10
- Utility, vNM utility functions, vNM assumptions