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No. There are people who don't seem to understand what is EUT who claim so, though. [1] If EE just puts the U in EUT it will also fail as a theory of financial
by kgwgk 6y ago
No. There are people who don't seem to understand what is EUT who claim so, though. [1]
If EE just puts the U in EUT it will also fail as a theory of financial decision making in all the cases where EUT fails.
[1] Did Ergodicity Economics and the Copenhagen Experiment Really Falsify Expected Utility Theory?
https://researchers.one/articles/20.02.00002 https://researchers.one/articles/20.02.00002
- ReflectedImage 6y agoEE does not put an U in EUT. EE stats that in EUT the U term must equal log (Wealth) otherwise EUT produces wrong results. EE uses a completely different formula. It has an open space for a (slightly restricted) function (similar to U). An example of EE with this open space filled is Kelly's criterion, which of course looks nothing like EUT.
- kgwgk 6y ago> An example of EE with this open space filled is Kelly's criterion, which of course looks nothing like EUT. I’m not sure if I’m reading this correctly: Kelly’s criterion looks nothing like EUT? Maybe I completely misunderstood what you were trying to say. https://en.wikipedia.org/wiki/Kelly_criterion https://en.wikipedia.org/wiki/Kelly_criterion “The Kelly bet size is found by maximizing the expected value of the logarithm of wealth, which is equivalent to maximizing the expected geometric growth rate.”