On a functional equation arising from comparison of utility representations (Q1772377)
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English | On a functional equation arising from comparison of utility representations |
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On a functional equation arising from comparison of utility representations (English)
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18 April 2005
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The area of applications of functional equations is still enriched. In the present paper it is the question about theory of games, more precisely about utility representations. Let \(c\) be a set of valued consequences, \(f,g,c \), and \(G\) an event. By \((f, G; g)\) is noted an uncertain alternative (binary gamble) in which the holder receives \(f\) if \(G\) occurs and receives \(g\) if it does not. A ``utility function'' \(U\) maps the set of all such gambles and consequences onto the half-open interval \([0,k)\), and a ``weighting function'' \(W\) maps the set of all events into the closed interval \([0,1]\). One has a ``utility representation'' if \(U[(f, G; g)]=M[U(f), U(g),W(G)]\). By suitable reasoning intending the ``mathematization'' of the area of applications and by suitable notations the authors attain the functional equation \(F_1(t+s)=F_2[F_3(t) + F_4(s)]\) where the functions are real and defined on intervals, \(F_2\) strictly monotonic and \(F_3\) is continuous. The authors solve the equation under conditions originated in applications, offering detailed proofs.
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Functional equation
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Utility representation
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Binary gamble
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Convexity
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