Friedman–Savage Utility Function
The Friedman-Savage utility function is the theory that Milton Friedman and Leonard J. Savage put forth in their 1948 paper, which argued that the curvature of an individual's utility function differs based upon the amount of wealth the individual has. This curving utility function would thereby explain why an individual is risk-loving when he has less wealth (e.g., by playing the lottery) and risk-averse when he is wealthier (e.g., by buying insurance). The function has been used widely, including in the field of Economic History to explain why social gambling did not necessarily mean that society had gone gambling mad.
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