QUESTION 6 in MultiCriteria Decision Analysis marginal uilit

QUESTION 6 in Multi-Criteria Decision Analysis marginal uility functions are used to assist the decision maker to come to the besf solution. Utlity functions can be either risk prone, risk adverse or neutral Desarbe the ?1% T TTT Paragraph ? Arial

Solution

Ans

A risk neutral person values each new money unit less than previous unit. He will take a money amount (with certainty) smaller than expected value of lottery

A risk expectant utility means a person\'s values a new money unit more than previous unit. He can be bought out by money amount greater than expected value of lottery

Risk neutral utility means a person is indifferent between an equal amount of money with certainty and similar expected value of lottery