Accession Number : AD0412520
Title : MEASURING UTILITY BY A SINGLE-RESPONSE SEQUENTIAL METHOD,
Corporate Author : CALIFORNIA UNIV LOS ANGELES
Personal Author(s) : Becker,Gordon M. ; DeGroot,Morris H. ; Marschak,J.
Report Date : JUL 1963
Pagination or Media Count : 19
Abstract : A sequential experiment is described that pro vides, at each stage in the sequence, an esti mate of the utility to the subject of some amount of a commodity (e.g., money), and to present a few experimental results obtained with the method. The procedure is based upon the following well-known expected utility hypothesis. For each person there exist numerical constants, called utilities, associated with the various possible outcomes of his actions, given external events not under his control. If, for a given subject, we could know the values of these con stants and the (''personal'') probabilities he assigns to the various external events we can, according to this model, predict his choice from among any available set of actions: He will choose an action with the highest expected utility; i.e., with the highest average of utilities of outcomes, weighted by the proba bilities he assigns to the corresponding events. He will be indifferent between any two actions with equal expected utilities. Note that (by the nature of weighted averages) the comparison between expected utilities does not depend on which two particular outcomes are regarded as having zero-utility and unit-utility. (Author)
Descriptors : (*MONEY, MEASURE THEORY), (*SEQUENTIAL ANALYSIS, MATHEMATICAL ANALYSIS), PROBABILITY, ECONOMICS, GAME THEORY.
Distribution Statement : APPROVED FOR PUBLIC RELEASE