For example if one burger is consumed in the morning and another in the afternoon then the second burger may provide equal or. The expected utility theory takes into account that individuals may be risk-averse meaning that the individual would refuse a fair gamble a fair gamble has an expected value of zeroRisk aversion implies that their utility functions are concave and show diminishing marginal wealth utility.
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Law of diminishing marginal utility will operate only when consumption is a continuous process.
. The risk attitude is directly related to the curvature of the utility function.
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