This is a draft cheat sheet. It is a work in progress and is not finished yet.
Types of Risk PreferenceThink investment, or the lottery. Risk aversion means every dollar is less valuable than the previous. Risk neutrality means the player is indifferent between gambling and receiving expected profit with certainty. Risk seeking means every dollar is more valuable than the previous. |
| | Von Neumann-Morgenstern UtilityThe expected utility of a lottery is the weighted average of preferences of possible outcomes (when the players have "rational preferences." It's invariant under affine transformations. |
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