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Two-Moment Decision Models and Expected Utility Maximization
The American Economic Review
Vol. 77, No. 3 (Jun., 1987), pp. 421-430
Published by: American Economic Association
Stable URL: http://www.jstor.org/stable/1804104
Page Count: 10
You can always find the topics here!Topics: Economic models, Random variables, Mathematical independent variables, Decision making models, Indifference curves, Expected utility, Concavity, Utility functions, Modeling, Risk aversion
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Two-moment decision models are consistent with expected utility maximization only if the choice set or the agent's preferences are restricted. This paper identifies a restriction which is sufficient to ensure this consistency and confirms that it holds in many economic models. The implications for economic analysis are then derived.
The American Economic Review © 1987 American Economic Association