Why Moments (and Generalized Moments) Are Used in Statistics and Why Expected Utility Is Used in Decision Making: A Possible Explanation

Authors

R. Noah Padilla, The University of Texas at El PasoFollow
Vladik Kreinovich, The University of Texas at El PasoFollow

Publication Date

11-1-2021

Comments

Technical Report: UTEP-CS-21-87

Abstract

Among the most efficient characteristics of a probability distribution are its moments and, more generally, generalized moments. One of the most adequate numerical characteristics describing human behavior is expected utility. In both cases, the corresponding characteristic is the sum of results of applying appropriate nonlinear functions applied to individual inputs. In this paper, we provide a possible theoretical explanation of why such functions are efficient.