Transforming Ordinal Riskless Utility into Cardinal Risky Utility: A Comment on Chung, Glimcher, and Tymula (2019)

Peter P. Wakker*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

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

Original languageEnglish
Pages (from-to)561-565
Number of pages5
JournalAmerican Economic Journal: Microeconomics
Volume14
Issue number2
DOIs
Publication statusPublished - May 2022

Bibliographical note

JEL Classification:
C91 Design of Experiments: Laboratory, Individual
D12 Consumer Economics: Empirical Analysis
D81 Criteria for Decision-Making under Risk and Uncertainty

Publisher Copyright: © 2022, American Economic Journal: Microeconomics.All Rights Reserved.

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