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- Exponential_utility abstract "In economics and finance, exponential utility refers to a specific form of the utility function, used in some contexts because of its convenience when risk (sometimes referred to as uncertainty) is present, in which case expected utility is maximized. Formally, exponential utility is given by:,where is a variable that the economic decision-maker is concerned with, such as consumption, and is a positive constant that represents the degree of risk aversion. The variable c itself will be a function of the agent's choices (of for example labor supply, etc., depending on the focus of the model) and of exogenous stochastic variables. Note that the additive term 1 in the above function is mathematically irrelevant and is (sometimes) included only for the aesthetic feature that it keeps the range of the function between zero and one over the domain of non-negative values for c. The reason for its irrelevance is that maximizing the expected value of utility gives the same result for the choice variable as does maximizing the expected value of since expected values of utility (as opposed to the utility function itself) are interpreted ordinally instead of cardinally, the range and sign of the expected utility values are of no significance.The exponential utility function is a special case of the hyperbolic absolute risk aversion utility functions.".
- Exponential_utility wikiPageID "9558678".
- Exponential_utility wikiPageRevisionID "548323223".
- Exponential_utility hasPhotoCollection Exponential_utility.
- Exponential_utility subject Category:Economics_of_uncertainty.
- Exponential_utility subject Category:Financial_economics.
- Exponential_utility subject Category:Utility.
- Exponential_utility comment "In economics and finance, exponential utility refers to a specific form of the utility function, used in some contexts because of its convenience when risk (sometimes referred to as uncertainty) is present, in which case expected utility is maximized. Formally, exponential utility is given by:,where is a variable that the economic decision-maker is concerned with, such as consumption, and is a positive constant that represents the degree of risk aversion.".
- Exponential_utility label "Exponential utility".
- Exponential_utility label "Utilidad exponencial".
- Exponential_utility sameAs Utilidad_exponencial.
- Exponential_utility sameAs m.02pjyy8.
- Exponential_utility sameAs Q5421533.
- Exponential_utility sameAs Q5421533.
- Exponential_utility wasDerivedFrom Exponential_utility?oldid=548323223.
- Exponential_utility isPrimaryTopicOf Exponential_utility.