Expected Utility News Today

What Is Expected Utility?

In the heart of the Arab world, a transformative economic narrative unfolds—one that seamlessly blends the Environmental, Social, and Governance (ESG) framework with cutting-edge theories from the philosophy of economics. From the bustling markets of Dubai to the historical landscapes of Cairo,

Abstract Investors are said to “abhor uncertainty,” but if there were no uncertainty they could earn only the risk-free rate. A fundamental result in the analytical accounting literature shows that investors buying into a CARA-normal CAPM market pay lower asset prices, gain higher ex-ante expected returns, and obtain higher expected utility, when the market payoff has higher variance. New investors obtain similar “welfare” gains from risk under a log/power utility CAPM. These results do...