Talk:Exponential utility

Formula
The formula is currently $$u(c)=1-e^{-a c}/a$$, which is not the most convenient form. The most used form of this utility function is when only risk-aversion ($$a>0$$) is allowed and the formula is $$u(c)=1-e^{-a c}$$. The 1 is only for the convenience of having non-negative utility. If we want to allow non-risk-aversion behavior then we to allow for $$a \leq 0$$. To keep utility increasing in c that means we need to divide by a. But in order to maintain the reason for the 1 we need to define it as $$u(c)=(1-e^{-a c})/a$$ so that it stays positive (this is not the case with the current formula). We also need to define the formula for $$a=0$$ (risk-neutrality) which should be $$u(c)=c$$. I think we should note in the article the simple (only risk-aversion) formula and then the 2-case setup allowing any risk preference. --Bequw (talk) 22:09, 25 November 2014 (UTC)