Exposition of a New Theory on the Measurement of Risk

  title={Exposition of a New Theory on the Measurement of Risk},
  author={Daniel Bernoulli},
EVER SINCE mathematicians first began to study the measurement of risk there has been general agreement on the following proposition: Expected values are computed by multiplying each possible gain by the number of ways in which it can occur, and then dividing the sum of these products by the total number of possible cases where, in this theory, the consideration of cases which are all of the same probability is insisted upon. If this rule be accepted, what remains to be done within the… 

The So-Called Allais Paradox and Rational Decisions under Uncertainty

The present memoir constitutes an extension of my 1952 study, The Foundations of a Positive Theory of Choice Involving Risk and a Criticism of the Postulates and Axioms of the American School (see

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Risk, Probabilities, and a New Theory of Cardinal Utility

  • J. Handa
  • Economics
    Journal of Political Economy
  • 1977
This paper presents a set of certainty-equivalence (CE) axioms which allow the individual's preferences to be expressed by a cardinal utility index in the case of quantifiable single-good, uncertain

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This book describes the classical axiomatic theories of decision under uncertainty, as well as critiques thereof and alternative theories. It focuses on the meaning of probability, discussing some

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The Bernoullis and the origin of probability theory: Looking back after 300 years

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ThENEWED attention is currently ~ being devoted to a hypothesis LX. about choices involving risk suggested by Gabriel Cramer and Daniel Bernoulli, employed by Alfred Marshall, and recently revived by


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The word ‘should’ in the title of this paper has the same meaning as in the following sentences: “In building a house, why should one act on the assumption that the floor area of a room is the

An Experimental Measurement of Utility