Maximizing expected utility is not the same as maximizing expected value. The latter assumes risk neutrality, but vNM is totally consistent with maximizing expected utility under arbitrary levels of risk aversion, meaning that it doesn’t provide support for your view expressed elsewhere that risk aversion is inconsistent with vNM.
The key point is that there is a subtle difference between maximizing a linear combination of outcomes, vs maximizing a linear combination of some transformation of outcomes. That transformation can be arbitrarily concave, such that we would end up making a risk averse decision.
Thanks for the comment, Karthik! I strongly upvoted it. I have changed “expected value” to “expected utility” in this post, and updated to the following the last paragraph of the comment of mine you linked to.
I reject risk aversion with respect to impartial welfare (although it makes all sense to be risk averse with respect to money), as I do not see why the value of additional welfare would decrease with welfare.
Maximizing expected utility is not the same as maximizing expected value. The latter assumes risk neutrality, but vNM is totally consistent with maximizing expected utility under arbitrary levels of risk aversion, meaning that it doesn’t provide support for your view expressed elsewhere that risk aversion is inconsistent with vNM.
The key point is that there is a subtle difference between maximizing a linear combination of outcomes, vs maximizing a linear combination of some transformation of outcomes. That transformation can be arbitrarily concave, such that we would end up making a risk averse decision.
Thanks for the comment, Karthik! I strongly upvoted it. I have changed “expected value” to “expected utility” in this post, and updated to the following the last paragraph of the comment of mine you linked to.