Utility representation theorem
In economics, a utility representation theorem asserts that, under certain conditions, a preference ordering can be represented by a real-valued utility function, such that option A is preferred to option B if and only if the utility of A is larger than that of B.
Utility representation theorem - Wikipedia Jump to content From Wikipedia, the free encyclopedia Theorem in economics In economics , a utility representation theorem shows that, under certain conditions, a preference ordering can be represented by a real-valued utility function , such that option A is preferred to option B if and only if the utility of A is larger than that of B. The most famous example of a utility representation theorem is the Von Neumann–Morgenstern utility theorem , which shows that any rational agent has a utility function that measures their preferences over lotteries .
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