This posting is for the benefit of the students taking my class "Judgment and Decision Making". I set the exercise of measuring your utility function for a certain range of monetary values, using two different methods: The Certainty Equivalence Method and the Probability Equivalence Method. Of key interest is whether the two functions look the same when plotted graphically. I did this exercise myself and the results are shown above.
When you do this, I'd like you to insert the graphs into your blog and include some commentary - especially if you find that the two curves look different. The website for plotting the graph is
here. Select the option for coordinates plotting. Say you want to enter 5 coordinates, and then select
. On the page that appears enter the monetary amounts in the column for X and the utility values in the column for Y. From the menu options to the right enter a short title in the
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2 comments:
The full description of the "how-to" cuts near the end. This is the bit missing, copypasted from the pdf from weblearn:
"From the menu options to the right enter a short title in the "Title" box
(this will appear on the subsequent graph); also, click the box that says "Show Axes", so
that the appropriate scales will appear on the graph. Select the "Plot Graph" option from
beneath the X and Y values. Go back to the options on the right of the screen and use
"Download Graph" to save the graph to your desktop or other convenient location."
Thank you - looks like I made a cut and paste error.
David
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