Utility Theory and Preferences

Leonard C. MacLean and William T. Ziemba

Chapter 1 in Sports Analytics, 2022, pp 1-9 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Utility theory allows us to have a way to make good normative decisions that should improve performance. We present axioms that lead to expected utility theory. In reality people might make decisions based on other precepts so we discuss the prospect theory of Kahneman and Tversky which has good points and critics. Finally we discuss various good utility function and their Arrow-Pratt risk aversion characteristics.

Keywords: Sports Analytics; Statistical Analysis of Sports Decisions; NFL Football; Thoroughbred Racing; Basketball; Baseball; Hockey; Jai Alai; Optimal Betting Strategies; Mean Reversion Risk; Arbitrage; Decision Strategies by Coaches (search for similar items in EconPapers)
JEL-codes: C1 L83 Z2 (search for similar items in EconPapers)
Date: 2022
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