I’m confused about what is uncomfortable about this, or what function of wealth you would measure utility by.
Naively it seems that logarithmic functions would be more risk averse than nth root functions which I have seen Robin Hanson use. How would a u-function be more sensitive to current wealth?
I think the uncomfortable part is that bill’s (and my) experience suggests that people are even more risk-averse than logarithmic functions would indicate.
I’d suggest that any consistent function (prospect theory notwithstanding) for human utility functions is somewhere between log(x) and log(log(x))… If I were given the option of a 50-50 chance of squaring my wealth and taking the square root, I would opt for the gamble.
I’m confused about what is uncomfortable about this, or what function of wealth you would measure utility by.
Naively it seems that logarithmic functions would be more risk averse than nth root functions which I have seen Robin Hanson use. How would a u-function be more sensitive to current wealth?
I think the uncomfortable part is that bill’s (and my) experience suggests that people are even more risk-averse than logarithmic functions would indicate.
I’d suggest that any consistent function (prospect theory notwithstanding) for human utility functions is somewhere between log(x) and log(log(x))… If I were given the option of a 50-50 chance of squaring my wealth and taking the square root, I would opt for the gamble.