quadratic_uf: The quadratic utility function.

In gary-au/pt: Computational models for prospect theory and other theories of risky decision making

Description

The quadratic utility function is given by

U(oc) = alpha * oc - oc^2, if oc >= 0 and

U(oc) = -lambda * (beta * (-oc) - (-oc)^2), if oc < 0.

U is the utility and oc is the objective consequence of a gamble outcome. lambda is the loss aversion coefficient. The Tversky & Kahneman (1992) assumption has also been made, namely

U(-oc) = -lambda * U(oc) where oc >= 0.

Usage

quadratic_uf(par, oc)

Arguments

par	vector, parameters alpha, beta and lambda for the utility function.
oc	numeric, the objective consequence

gary-au/pt documentation built on May 16, 2019, 5:41 p.m.