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Handbook of the Economics of Risk and Uncertainty
book

Handbook of the Economics of Risk and Uncertainty

by Mark Machina, W. Kip Viscusi
November 2013
Beginner content levelBeginner
896 pages
35h 10m
English
North Holland
Content preview from Handbook of the Economics of Risk and Uncertainty
The Value of Individual and Societal Risks to Life and Health
391
associated with that wage increase, (1 – p)u + pv, equals the difference in the utility
levels between the two states of the world, uv. The formulation in equation (7.1) is so
fundamental to the VSL literature that it has been “rediscovered” dozens of times.
Note that von Neumann-Morgenstern utility functions are only defined up to a
positive linear transformation. Thus, the utility functions u and v are equivalent to a + bu
and a + bv where a and b are positive constants. In the absence of some normalization
as is provided by the denominator, (1 – p)u + pv, the VSL corresponding ...
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Publisher Resources

ISBN: 9780444536853