Uncertainity Flashcards
1
Q
expected value
A
is the possible outcomes X the probability
2
Q
expected utility
A
is the probability weighted-average of the utility from each possible outcome
3
Q
fair bet/gamble
A
a gamble with an expected value of 0
4
Q
risk adverse
A
unwilling to make a fair bet
5
Q
risk neutral
A
indifferent about making a fair bet
6
Q
risk taker
A
willing to make a fair bet
