Let Y be a random variable that we would like to predict Suppose that we must choose a single number d as the prediction and that we will lose (Y d)2 dollars Suppose that our utility for dollars is a square root function Prove that the value of d that maximizes expected utility is a median of the d...

The expected utility from choosing ...

Let Y be a random variable that we would like to predict. Suppose that we must choose

Question:

Let Y be a random variable that we would like to predict. Suppose that we must choose a single number d as the prediction and that we will lose (Y ˆ’ d)2 dollars. Suppose that our utility for dollars is a square root function:

Prove that the value of d that maximizes expected utility is a median of the distribution of Y.

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...