Investors are utility maximizers do you agree explain with the help of suitable example ans
Answers
Assuming that agents' preferences satisfy first-order stochastic dominance, we show how the (Generalized) Expected Utility paradigm can rationalize all optimal investment choices: the optimal investment strategy in any behavioral law-invariant (state-independent) setting corresponds to the optimum for a risk averse (generalized) expected utility maximizer with an explicitly derived concave utility function. This result enables us to infer the utility and risk aversion of agents from their investment choice in a non-parametric way. We relate the property of decreasing absolute risk aversion (DARA) to distributional properties of the terminal wealth and the financial market. Specifically, we show that DARA is equivalent to a demand for a terminal wealth that has more spread than the opposite of the log pricing kernel at the investment horizon.
In a business the financial investment is one of the most important components which is mandatorily necessary.
That's why financial investors are also the major backbone of any business startup.
If the investors put more effort or in easy words,if the investors do more amount of investments in the business,the utility of that business also increases.
That's why investors are known as the utility maximizers of a business.