Which gets us to Von Neumann Utility A gambler who will make the same bet many times accepts it if the expected value in money is positive-on average it is a winning gamble. Von Neumann generalized the idea to: An individual faced with a gamble accepts it if the expected value in utility is positive Risk Averse:Prefer a certain outcome to a gamble with the same expected value. Which means that declining marginal utility of income risk aversion Which gets us to Von Neumann Utility • A gambler who will make the same bet many times accepts it if the expected value in money is positive–on average it is a winning gamble. • Von Neumann generalized the idea to: An individual faced with a gamble accepts it if the expected value in utility is positive • Risk Averse: Prefer a certain outcome to a gamble with the same expected value. Which means that declining marginal utility of income = risk aversion