| 21. | This representation also rationalizes ambiguity aversion and has the maxmin expected utility as a particular case.
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| 22. | Therefore, the validity of expected utility theory depends on the empirical validity of the independence axiom.
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| 23. | The aim when designing an experiment is to maximize the expected utility of the experiment outcome.
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| 24. | Particular theories include prospect theory, rank-dependent expected utility and cumulative prospect theory and SP / A theory.
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| 25. | Cumulative prospect theory is one popular generalization of expected utility theory that can predict many behavioral regularities.
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| 26. | This differs from expected utility theory, in which a rational agent is indifferent to the reference point.
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| 27. | Then expected utility can be written as
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| 28. | According to expected utility theory, the person should choose either 1A and 2A or 1B and 2B.
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| 29. | When the uncertainty is well-characterized then traditional expected utility ( predict-then-act ) analyses are often most appropriate.
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| 30. | A variety of generalized expected utility theories have arisen, most of which drop or relax the independence axiom.
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