utility function
the utility function of money mentioned last post has a few features. it's monotonically increasing. u(0)=0. u(m)/m is monotonically decreasing. maybe real economists can add some more requirements. but this is good enough for me. many many functions fit the bill. some examples would be: square root, log of money+1, etc. it's a bit of a phd exercise (ie tedious!) to figure out someone's utility for money. the problem is you know the value of the money you have. but you have to guess at the value of greater and lesser amounts. basically you make up games like the previous post. suppose you win $250k in the lottery. or you can take door number two: a 50% chance of M dollars where M is the amount of money it would take to get you to take the deal. now you know: utility($250k) = 0.5*utility(M). repeat the procedure with different money amounts until you can deduce the entire utility function. try it! apply it! odds are, it's not something as simple as taking a square root.