Question
Suppose that there are two decision makers, with preference relations that admit a vNM representation using utility functions u1 and u2. They communicate their utility
Suppose that there are two decision makers, with preference relations that admit a vNM representation using utility functions u1 and u2. They communicate their utility functions to a third person, who computes a function u = 1 2 u1 + 1 2 u2. Under what conditions is u a utility function? Suppose that the third person derives a preference relation >u from u according to the vNM representation. Give an example where >u coincides with the preference relation of the first decision maker in some cases, and with the preference relation of the second decision maker in other cases.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started