Exam 5: Utility Game Theory

Three decision makers have assessed utilities for the problem whose payoff table appears below. a.Plot the utility function for each decision maker. b.Characterize each decision maker's attitude toward risk. c.Which decision will each person prefer?

The expected monetary value approach and the expected utility approach to decision making usually result in the same decision choice unless extreme payoffs are involved.

Utility reflects the decision maker's attitude toward

A decision maker has the following utility function What is the risk premium for the payoff of 50? Payoff Indifference Probability 200 1.00 150 .95 50 .75 0 .60 -50 0

The expected utility is the utility of the expected monetary value.

Values of utility

If the payoff from outcome A is twice the payoff from outcome B,then the ratio of these utilities will be

The purchase of insurance and lottery tickets shows that people make decisions based on

The outcome with the highest payoff will also have the highest utility.

Explain how utility could be used in a decision where performance is not measured by monetary value.​

Explain the relationship between expected utility,probability,payoff,and utility.​

The risk premium is never negative for a conservative decision maker.

A game has a saddle point when the maximin payoff value equals the minimax payoff value.

A 3 x 3 two-person zero-sum game that has no optimal pure strategy and no dominated strategies

A risk avoider will have a concave utility function.

When monetary value is not the sole measure of the true worth of the outcome to the decision maker,monetary value should be replaced by utility.