The Utility Theory Daniel Bernoulli

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The Utility Theory Daniel Bernoulli Eng. Jad Wehbe Notre Dame University Zouk Mosbeh, Lebanon jswehbe@ndu.edu.lb I. General Background Daniel Bernoulli a Swiss mathematician and a physicist, was born in Groningen in the Netherlands on February 8th 1700, and died at the age of 82 years old in Basel on 17th march 1782. He created many applications from mathematics to mechanics, and was one of the people who pioneered and developed theories, and concepts in probability and statistics. His first Mathematical work began in in 1724, entitled the Exercitationes (mathematical exercices). In 1738 he published his work Hydrodynamica, based on the concept of conservation of energy resulting in a Mathematical law: 1/2 ρ u^2 + P = constant, where P is pressure, ρ is the density and u is the velocity. In physics his work Hydrodynamica, enabled him to establish the basis and ideas in explaining Boyle 's law about the kinetic theory of gases. He worked with Euler in the development of the Euler-Bernoulli beam equation in elasticity, which played a critical factor in the field of aerodynamics. Finally in statistics, Bernoulli was the author of the paper “Exposition of a New Theory on the Measurement of Risk” relevant to the St. Petersburg paradox (is a paradox related to probability and decision theory in economics), which was the basis of multiple economic theories of risk aversion, risk premium and utility theory. In this paper today, I’ll be tackling the different concepts and

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