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Published in:
1987 | OriginalPaper | Chapter
Von Neumann-Morgenstern Utilities, Risk Taking, and Welfare
Author : John C. Harsanyi
Published in: Arrow and the Ascent of Modern Economic Theory
Publisher: Palgrave Macmillan UK
Included in: Professional Book Archive
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Von Neumann and Morgenstern (1953, p. 28) have made it very clear that their utility theory disregards the utility (or the disutility) of the act of gambling itself. It seems to me that the utility functions defined by their theory have often been misinterpreted by paying insufficient attention to this fact. The purpose of this paper is to suggest a more adequate interpretation of von Neumann-Morgenstern (vNM) utility functions.