- +1-530-264-8006
- info@tutorsglobe.com

18,76,764

Questions

Asked

21,311

Experts

9,67,568

Questions

Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment
## Axioms of Expected Utility

The Axioms of Expected Utility:• Preferences over possible outcomes are complete, reflexive, and transitive.

• Compound lotteries is able to be reduced to simple lotteries.

• Continuity: For each outcome xi between x1and xn , the consumer can name a probability, p

_{i}, such that s/he is indifferent between getting xi with certainty and playing a lottery (which involves getting x_{n}with probability pi and x1 with probability (1− p_{i})). We utter that x_{i}is the certainty equal to the lottery ~x_{i}where:~x= (x

_{n}with p_{i}and x_{1}with (1−p_{i})).• Substitutability. The lottery~x

_{i}is able to forever be substituted for its certainty equivalent x_{i}in any other lottery.• Monotonicity. If two lotteries with the similar two alternatives each differ only in probabilities then the lottery that gives elevated probability to the most-preferred alternative is preferred to the other lottery.

If preferences over lotteries satisfy above axioms then we is able to assign numbers U(x

_{i}) which is associated with the outcomes x_{i}such that if we compare two lotteries L and L′ which offer probabilities (p1, L, p_{n}) and (p_{1}, ,p_{n}) ′L′ of obtaining those outcomes L will be preferred to L′ if and only if:This signifies that the rank order by expected utilities reflects the rank order of preference over the lotteries and that the rational individual will choose amongst risky alternatives as if s/he is maximizing expected utility.

Latest technology based Microeconomics Online Tutoring AssistanceTutors, at the

www.tutorsglobe.com, take pledge to provide full satisfaction and assurance inMicroeconomics helpviaonline tutoring. Students are getting 100% satisfaction byonline tutorsacross the globe. Here you can get homework help for Microeconomics, project ideas and tutorials. We provide email basedMicroeconomics help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Microeconomics. ThroughOnline Tutoring, you would be able to complete your homework or assignments at your home. Tutors at theTutorsGlobeare committed to provide the best qualityonline tutoringassistance forMicroeconomics Homework helpandassignment helpservices. They use their experience, as they have solved thousands of the Microeconomics assignments, which may help you to solve your complex issues of Microeconomics.TutorsGlobeassure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide thehomework helpas per the deadline or given instruction by the student, we refund the money of the student without any delay.