Chung, Glimcher, and Tymula (2019) observed both consumers’ choices over commodity bundles and choices under risk. They assumed a cardinal riskless utility function V representing consumer choices and a cardinal risky utility function U. The two were inconsistent. This note shows that the two functions can be reconciled if we assume that V is ordinal. Then one utility function U can accommodate both risky and riskless choices
Bibliographical noteJEL Classification:
C91 Design of Experiments: Laboratory, Individual
D12 Consumer Economics: Empirical Analysis
D81 Criteria for Decision-Making under Risk and Uncertainty
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