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In expected utility theory, a lottery is a discrete distribution of probability on a set of states of nature. The elements of a lottery correspond to the probabilities that each of the states of nature will occur, (e.g. Rain: 0.70, No Rain: 0.30). Much of the theoretical analysis of choice under uncertainty involves characterizing the available choices…
Choice under risk & Overview
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utility lottery lotteries expected theory people probabilities preferences choice outcomes states nature economics possible could person cured uncured dead make
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