Write short notes on following: (a) vNM expected utility theory (b) Slutsky’s theorem (c) Arrow Pratt measure of risk averseness (d) Bergson-Samuelson Social welfare function
Introduction This answer presents short notes on four important microeconomic concepts: von Neumann-Morgenstern (vNM) expected utility theory, Slutsky’s theorem, Arrow-Pratt measure of risk aversion, and the Bergson-Samuelson social welfare function. These are key tools in decision theory, consumer behavior, risk analysis, and welfare economics respectively. (a) vNM Expected Utility Theory The von Neumann-Morgenstern (vNM) expected […]