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utility function





The lesson of the St. Petersburg Paradox is that people do not play games as if they are maximizing the expected monetary value they receive. However, certain rationality assumptions about the way people behave, known as the von Neumann and Morganstern axioms, imply that people do act as though they are maximizing something. This "something" is often referred to as a utility function.


Related category

   • GAMES AND PUZZLES