taw comments on Prospect Theory: A Framework for Understanding Cognitive Biases - Less Wrong

66 Post author: Yvain 10 July 2011 05:20AM

You are viewing a comment permalink. View the original post to see all comments and the full post content.

Comments (46)

You are viewing a single comment's thread. Show more comments above.

Comment author: DanielLC 15 February 2012 06:23:05PM 1 point [-]

Utility is generally accepted to be differentiable in money, which means that it's approximately linear in amounts that are insignificant over your lifetime earnings. If you use a non-linear utility to explain risk aversion for a small amount of money, and extend this until you get large amounts of money, it results in absurdly huge utility falloff. I remember someone posted an article on this. I can't seem to find it at the moment.

Comment author: taw 15 February 2012 07:15:28PM 0 points [-]