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In expected utility theory, a lottery is a discrete distribution of probability on a set of states of nature. The elements of a lottery correspond to the probabilities that each of the states of nature will occur, (e.g. Rain: 0.70, No Rain: 0.30). [ 1 ]
The lottery ′ is, in effect, a lottery in which the best outcome is won with probability (), and the worst outcome otherwise. Hence, if u ( M ) > u ( L ) {\displaystyle u(M)>u(L)} , a rational decision maker would prefer the lottery M {\displaystyle M} over the lottery L {\displaystyle L} , because it gives him a larger chance to win the best ...
The survival lottery is a thought experiment, proposed by the philosopher John Harris.The basis of the idea is to ask people to imagine if organ donation were expected to save more individuals than it would kill.
Robert Nozick, a twentieth century American philosopher, coined the term "utility monster" in response to Jeremy Bentham's philosophy of utilitarianism.Nozick proposed that accepting the theory of utilitarianism causes the necessary acceptance of the condition that some people would use this to justify exploitation of others.
In ethical philosophy, utilitarianism is a family of normative ethical theories that prescribe actions that maximize happiness and well-being for the affected individuals. [1] [2] In other words, utilitarian ideas encourage actions that lead to the greatest good for the greatest number.
Lottery fever is once again in the air. Despite low odds, experts explain how winning is a "powerful fantasy." The Mega Millions jackpot has reached $825 million.
If all these axioms are satisfied, then the individual is said to be rational and the preferences can be represented by a utility function, i.e. one can assign numbers (utilities) to each outcome of the lottery such that choosing the best lottery according to the preference amounts to choosing the lottery with the highest expected utility.
The Allais paradox is a choice problem designed by Maurice Allais () to show an inconsistency of actual observed choices with the predictions of expected utility theory. . The Allais paradox demonstrates that individuals rarely make rational decisions consistently when required to do so immediat