prase comments on Risk aversion does not explain people's betting behaviours - Less Wrong

8 Post author: Stuart_Armstrong 20 August 2012 12:38PM

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Comment author: prase 20 August 2012 06:21:22PM 2 points [-]

This theorem is a simple result of the fact that U($(X+55))-U($X) must be greater than 55MU($(X+54)) (each dollar up from the Xth up to the (X+54)th must have marginal utility at least MU($(X+55))), while U($X)-U($(X-50)) must be less than 50MU($(X-100)) (each dollar from the (X-50)th up to (X-1)th must have marginal utility at most MU($(X-50))).

Are you sure you didn't intend to have (X+55) in the formula just after "greater than" instead of (X+54) and (X-50) in the last formula before the final parenthetical instead of (X-100)?

Also I think the formulas would be more readable if you omitted the dollar sign.

Comment author: [deleted] 21 August 2012 10:00:05AM 1 point [-]

Also I think the formulas would be more readable if you omitted the dollar sign.

The best idea IMO is having it only with numbers, e.g. U(X + $54).

Comment author: Stuart_Armstrong 20 August 2012 10:39:06PM 0 points [-]

Good catch and corrected!