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The expected utility hypothesis is a foundational assumption in mathematical economics concerning decision making under uncertainty. It postulates that rational agents maximize utility, meaning the subjective desirability of their actions. Rational choice theory, a cornerstone of microeconomics, builds this postulate to model aggregate social ...
Let X be an affine space over a field k, and V be its associated vector space. An affine transformation is a bijection f from X onto itself that is an affine map; this means that a linear map g from V to V is well defined by the equation () = (); here, as usual, the subtraction of two points denotes the free vector from the second point to the first one, and "well-defined" means that ...
Economics. In decision theory, the von Neumann–Morgenstern (VNM) utility theorem demonstrates that rational choice under uncertainty involves making decisions that take the form of maximizing the expected value of some cardinal utility function. This function is known as the von Neumann–Morgenstern utility function.
In that information environment, admissible transformations are increasing affine functions and, in addition, the scaling factor must be the same for everyone. This information assumption allows for interpersonal comparisons of utility differences, but utility levels cannot be compared interpersonally because the intercept of the affine ...
The utility function u(c) is defined only up to positive affine transformation – in other words, a constant could be added to the value of u(c) for all c, and/or u(c) could be multiplied by a positive constant factor, without affecting the conclusions. An agent is risk-averse if and only if the utility function is concave.
Affine diagrams are denoted as (), (), or (), where X is the letter of the corresponding finite diagram, and the exponent depends on which series of affine diagrams they are in. The first of these, X l ( 1 ) , {\displaystyle X_{l}^{(1)},} are most common, and are called extended Dynkin diagrams and denoted with a tilde , and also sometimes ...
Isomorphism. The group of fifth roots of unity under multiplication is isomorphic to the group of rotations of the regular pentagon under composition. In mathematics, an isomorphism is a structure-preserving mapping between two structures of the same type that can be reversed by an inverse mapping. Two mathematical structures are isomorphic if ...
For one gets a point reflection at point. Homothety of a pyramid. In mathematics, a homothety (or homothecy, or homogeneous dilation) is a transformation of an affine space determined by a point S called its center and a nonzero number called its ratio, which sends point to a point by the rule [1] for a fixed number . Using position vectors: .