Faced with an uncertain situation,the best decision for a person obeying the von-Neumann Morgenstern axioms:
A)minimizes loss relative to the status quo.
B)minimizes variability across possible outcomes.
C)maximizes the expected payoff.
D)maximizes expected utility.

Question

Faced with an uncertain situation,the best decision for a person obeying the von-Neumann Morgenstern axioms:​
A)​minimizes loss relative to the status quo.
B)​minimizes variability across possible outcomes.
C)​maximizes the expected payoff.
D)​maximizes expected utility.

Quizplus · Accepted Answer

According to the von-Neumann Morgenstern axioms, the best decision for a person in an uncertain situation is to maximize their expected utility. This means that they should consider the potential outcomes of each decision and choose the option that provides the highest expected level of satisfaction or benefit, taking into account their own preferences and value system. Minimizing loss or variability may be secondary considerations, but ultimately the goal is to maximize expected utility.

Faced with an Uncertain Situation,the Best Decision for a Person