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Title: |
On Professor Kohn and Expected Utility: Correction and
Clarification--Rejoinder |
| Author: |
Kohn, Robert E. |
| Author
Affiliation: |
Southern IL U |
| Source: |
International Economic Journal, Summer 2001, v. 15, no. 2, pp. 57-62 |
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Publication Date: |
Summer 2001 |
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Abstract: |
Professor Horowitz correctly identifies
the limitation of my assuming separable utility functions to derive a
marginal condition for efficiency under uncertainty. Correcting this
limitation, he provides a simple but powerful condition that encompasses
the nonseparable as well as the separable case. This condition replaces
the dubious Equation derived in Kohn (1999). In a departure from von
Neumann-Morgenstern theory, for cases in which the decisions of a
risk-averse community are compared with those it would make were it
risk-neutral, it is proposed here that the same utility function holds
for risk-neutrality as for risk-aversion, but that the stochastic
quantities be replaced by their expected value in the former. |
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