Adjacent: Decision Science · Adjacent
Decision Theory
How to choose under uncertainty when there's no opponent: expected value vs expected utility, risk aversion and certainty equivalents, decision trees, the value of information, the Kelly criterion, and the Allais and Ellsberg paradoxes.
Step 1 of 6 · Overview30 min read ·
Key idea
Prereqs: Random variables & expectation. Next: Poker strategy. Sources: von Neumann & Morgenstern, *Theory of Games and Economic Behavior* (1944); Allais (1953); Ellsberg (1961); Kelly, 'A New Interpretation of Information Rate' (1956).Next: 1. Expected utility