Expected Utility Illustrated: A Graphical Analysis of Gambles with More than Two Possible Outcomes

Frederick H. Chen

The Journal of Economic Education, 2010, vol. 41, issue 1, 63-70

Abstract: The author presents a simple geometric method to graphically illustrate the expected utility from a gamble with more than two possible outcomes. This geometric result gives economics students a simple visual aid for studying expected utility theory and enables them to analyze a richer set of decision problems under uncertainty compared to what they typically see in an intermediate-level microeconomics course.

Date: 2010
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DOI: 10.1080/00220480903382214

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