Exercise 2 No.

Let R consist of three elements, r1, r2, and r3. Assume that r3< r2< r1. The utility function is U(r3)=0, U(r2)=u, and U(r1)=1, where 0<u<1. a) If P=(p1,p2,p3) and Q=(q1,q2,q3) are two elements of P (i.e. probability distribution of R ), state a numerical condition (in terms of the pi, qj, and u) under which P<Q. b) Assume (0.3,0.3,0.4) < (0.5,0,0.5). What can you say about the relationship between (0.2,0.5,0.3) and (0.4,0.2,0.4)? what can you say about u?

Answer: a) P menunjukkan himpunan semua distribusi probabilitas yang mungkin. P<Q dan r3< r2< r1 ( ) ( )

Fungsi utilitas ( ( ( ) ) )

Untuk 0<u<1 terlihat bahwa pi<qj sehingga P<Q b) Untuk (0.3,0.3,0.4) < (0.5,0,0.5)

Namakan u di atas dengan ur

Namakan u di atas dengan us Terlihat bahwa ur < us Untuk (0.2,0.5,0.3) dan (0.4,0.2,0.4)

Namakan u di atas dengan ur

Namakan u di atas dengan us Karena nilai ur < us , maka diperoleh hubungan (0.2,0.5,0.3) < (0.4,0.2,0.4)