Bernoulli Utility Function explained with modeling example.
https://www.spicelogic.com/docs/DecisionTreeAnalyzer/UtilityFunction/bernoulli-utility-function-300
Simply put that, a Bernoulli Utility Function is a kind of utility functionthat model a risk-taking behavior such that, 1. If someone has more wealth, she will be much comfortable to take more risks, if the rewards are high. (i.e. a rich gambler) 2. But, if someone has less wealth, she will be more concerned about the worse case, and therefore, she will think twice before taking a risk of losing, even though, the reward can be high. That makes sense, right? And, that is the id…
Simply put that, a Bernoulli Utility Function is a kind of utility functionthat model a risk-taking behavior such that, 1. If someone has more wealth, she will be much comfortable to take more risks, if the rewards are high. (i.e. a rich gambler) 2. But, if someone has less wealth, she will be more concerned about the worse case, and therefore, she will think twice before taking a risk of losing, even though, the reward can be high. That makes sense, right? And, that is the id…
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