Some Applications in Economy for Utility Functions Involving Risk Theory
Abstract We present in the first part of the article types of utility functions that can describe the behavior of the investor and their applications to optimize portfolio. The second part of the paper refers to applications in calculating insurance premiums aggregated risk in zero utility principle.
An Introduction to Utility Theory
A gentle but reasonably rigorous introduction to utility theory. Utility functions give us a way to measure investor’s preferences for wealth and the amount of risk they are willing to undertake in the hope of attaining greater wealth. This makes it possible to develop a theory of portfolio optimization. Thus utility theory lies at the heart of modern portfolio theory. We develop the basic concepts of the theory through a series of simple examples. We discuss non-satiation, risk aversion, the principle of expected utility maximization, fair bets, certainty equivalents, portfolio optimization, coecients of risk aversion, iso-elasticity, relative risk aversion, and absolute risk aversion.
The structure of electricity demand in the Brazilian household sector
Abstract The present structure of residential electricity demand is analysed by electricity consumption classes and end-uses. Nearly 70% of households consume less than 150 kWh/month and are responsible for 35% of total residential demand. Other determinants of electricity-use, such as income and place of residence, are also discussed. It is found that electricity demand is increasing faster than income as the country reaches appliances saturation in upper consumption levels. Water heating and refrigeration account for the major part of residential consumption. Residential conservation efforts have started introducing more efficient lighting equipment and refrigerators, but further work will have to be done to speed up the diffusion of efficient technology at costs that can be paid by consumers.