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What is the history and development of utility theory in economics?

Prospect theory

Cardinal utility

Von Neumann–Morgenstern utility theorem

Bernoulli's principle

Ordinal utility

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Utility theory in economics has a rich history and has undergone significant development over time. The concept of utility can be traced back to Bernoulli, who sought to resolve the St. Petersburg Paradox by maximizing expected utility . Utility theory has greatly influenced investment decision-making, allowing investors to align decisions with their risk preferences and well-being . It is a psychological concept that forms the basis of economics and finance, with three types of utility - marginal, total, and average - being studied extensively . Expected utility theory, which assumes that people choose risky opportunities by comparing expected benefits, has been the foundation of traditional finance but has faced criticism . Non-expected utility theories, such as cumulative prospect theory and rank-dependent utility, have been developed to address the limitations of expected utility theory . The development of utility theories has not been linear, and a fresh perspective is needed to understand their evolution .

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Open access Development of Utility Theor y and Utility Paradoxes Timothy E. Dahlstrom 01 Jan 2016 2 Citations	The paper discusses the historical development of utility models in economics, including the work of von Neumann and Morgenstern in 1944 and the development of various utility theories.
Open access Development of Utility Theory and Utility Paradoxes Timothy E. Dahlstrom 01 Jan 2016	The paper discusses the historical development of utility models in economics, including the pioneering work of von Neumann and Morgenstern in 1944 and subsequent developments in Expected Utility theory.
Book Chapter•DOI Utility: Theories and Models Murat Akkaya 01 Jan 2021	The paper discusses utility theory in economics, including its main hypothesis, types of utility, and approaches to utility comparison. However, it does not provide a specific history or development of utility theory in economics.
Book Chapter•DOI Utility Theory Siddhartha P. Chakrabarty 01 Jan 2023	The paper discusses the history of utility functions, tracing it back to Bernoulli's attempt to resolve the St. Petersburg Paradox.

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