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Explain the concept of Expected Utility theory and its foundational assumptions. How does it differ from classical economics? Discuss the challenges of applying Expected Utility

Explain the concept of Expected Utility theory and its foundational assumptions. How does it differ from classical economics? Discuss the challenges of applying Expected Utility theory to real-world financial decision-making scenarios. Provide examples that illustrate both the strengths and limitations of this theory

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Expected Utility EU theory is a powerful tool for understanding decisionmaking under uncertainty It assumes individuals make choices by maximizing their expected utility which is the weighted average ... blur-text-image

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