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Decision Theory Foundations
Decision Theory Foundations
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state theorem
Expected Utility Theory (von Neumann-Morgenstern) says a rational agent maximizes expected utility. What properties must the utility function satisfy?
Hide and think first
A.
Concavity (risk aversion) and boundedness (finite minimum and maximum values)
B.
Convexity, differentiability, and monotonicity in all arguments
C.
Completeness (any two outcomes can be compared), transitivity, continuity, and independence (preferences are preserved under probability mixtures)
D.
Symmetry (outcomes are treated equally regardless of order) and associativity
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