Week 3: Expected Utility Theory

After this week, you should…

• be able to find the maximal elements of a relation.
• be able to describe a utility function.
• be able to explain the difference between cardinal and ordinal utility.
• be able to explain the difference between expected utility and expected value of a lottery.
• be able to find the expected value of a lottery.

Lecture 1 (Sep 15:   slides)

• Rationality and Utility Theory
• Reiss, Rational Choice
• Preferences and Choice
• Functions
• Lotteries
• Utility Functions
• Preferences Over Lotteries

Lecture 2 (Sep 17:   slides)

• Rationality and Utility Theory
• Reiss, Rational Choice
• Utility Functions
• Preferences Over Lotteries
• Expected Utility

Weekly Assignments

Problem Set 2 is due Sep 19.

Make sure that you have answered all the participation questions for Week 3 asked during the lectures (the questions asked on Tophat).

Ask questions on Piazza!