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Essay / Research Paper Abstract
This 9 page paper answers a set of questions. Answers look at how convex utility function is not compatible with risk aversion, why there will be co-operation in the prisoners’ dilemma, pareto optimal efficiency, indifferent curves utility and price curves for two products the application of game theory and marginal costs. The bibliography cites 3 sources.
Page Count:
9 pages (~225 words per page)
File: TS14_TEecqu04.rtf
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Unformatted sample text from the term paper:
To understand utility this is the relationship between money and how we value it (utility may be seen as satisfaction) (Begg et al, 2005). For example, if we will
1 million on the lottery we are likely to be very happy and out utility will increase dramatically, there is more we can do, but if the winning it two
million then the approach may not be twice the amount of happiness. However, if a lottery ticket was bought by a person who cannot pay the rent tjhey make think
if they win the winnings will make it possible to pay the rent and possible give a level of money left over. This may be seen as increasing the utility
if there is the outcome of a win and this may encourage increased risk taking. In this way the amount that is won, if it is enough to pay
the rent will have a utility proportionately greater than the amount due to making it possible for the student to pay the rent. However, if there is not any
winning, then the loss does not impact greatly on the utility f the student as the difference between only having a small amount and only having half the rent this
not very different if the rent is due; in both scenarios the rent cannot be paid. This is a convex utility function.
If we show the convex utility function then we can present a graph. The x axis shows the money and the Y axis the utility. Figure 1 Convex
utility curve Utility Money The line here is convex and this can be explained with an example. If
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