ECON 351x Lecture Notes - Lecture 5: Expected Utility Hypothesis, Utility, Standard Deviation
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Marshal peer tutoring = 351 is monday tuesday wednesday from 8-10pm, Quiz = 28 multiple choice question, look at all past quizzes and uses it again, use a lot of the past material (hw/quiz) but change the numbers, 10-20% is brand new. Variance = how risky the investment is, how different it is from the average/mean*will not be asked how to compute variance, simply understand it. If it is big, there is a big risk and far away from the mean, lots of uncertainty. Consumer gives you some utility function that changes. Standard deviation = also big if there is a lot of risk, small if there is not a lot of risk. Expected utility = sum of the utilities associated with all possible outcomes, weighted by the probability that each outcome will occur. Not everyone has a utility function that is the same.
