= 27d567bc2d48d9f40e9ccc20ea370b15)
PhilGoetz comments on Morality is not about willpower - Less Wrong
You are viewing a comment permalink. View the original post to see all comments and the full post content.
= 783df68a0f980790206b9ea87794c5b6)
Loading…= b715d02e85f7b3b4ae65ca3d3e450868)
Subscribe to RSS Feed
Powered by Reddit
= f037147d6e6c911a85753b9abdedda8d)
You are viewing a comment permalink. View the original post to see all comments and the full post content.
Comments (144)
Here's fundamental impossibility result for modeling risk aversion in expected utility framework, and this is for the ridiculously oversimplified and horribly wrong version of "risk aversion" invented specifically for expected utility framework.
Actual risk aversion looks nothing like a concave utility curve, you can get one bet right, then when you change bet size, bet probability, wealth level or anything, you start getting zeroes or infinities where you shouldn't, always.
Prospect theory provides simple models that don't immediately collapse and are of some use.
Also, prospect theory is a utility theory. You compute a utility for each possible outcome associated with each action, add them up to compute the utility for each action, then choose the action with the highest utility. This is using a utility function. It is a special kind of utility function, where the utility for each possible outcome is calculated relative to some reference level of utility. But it's still a utility function.
Every time someone thinks they have a knockdown argument against the use of utility functions, I find they have a knockdown argument against some special simple subclass of utility functions.