Transforming Ordinal Riskless Utility into Cardinal Risky Utility: A Comment on Chung, Glimcher, and Tymula (2019)

Peter Wakker

American Economic Journal: Microeconomics, 2022, vol. 14, issue 2, 561-65

Abstract: Chung, Glimcher, and Tymula (2019) observed both consumers' choices over commodity bundles and choices under risk. They assumed a cardinal riskless utility function V representing consumer choices and a cardinal risky utility function U. The two were inconsistent. This note shows that the two functions can be reconciled if we assume that V is ordinal. Then one utility function U can accommodate both risky and riskless choices.

JEL-codes: C91 D12 D81 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1257/mic.20190338

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