Quadratic utility absurdly implies investors would pay to lose wealth.

Evidence

Quadratic utility implied that beyond a certain level of wealth, increasing levels of wealth meant decreasing utility, so investors would “pay you to cart away their wealth” (Samuelson interview). — Donald MacKenzie, An Engine, Not a Camera, 589

Categorization

• CANDY: A crisp absurdity: the math implies you’d hand someone money to carry your wealth away — fun to drop at a dinner party.
• XREF: connects to: Mean-variance portfolio theory requires the restrictive quadratic utility assumption. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 588; Unrealistic assumptions do not count as legitimate criticisms in financial economics — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 63; Classical utility theory defines value by final wealth with diminishing marginal returns — John T. Jost and Jim Sidanius, Political Psychology, 2412

Broader Connections

• Mean-variance portfolio theory requires the restrictive quadratic utility assumption. #expands (0.90) — Donald MacKenzie, An Engine, Not a Camera, 588
• Classical utility theory defines value by final wealth with diminishing marginal returns #qualifies (0.80) — John T. Jost and Jim Sidanius, Political Psychology, 2412
• Unrealistic assumptions do not count as legitimate criticisms in financial economics #corroborates (0.75) — Donald MacKenzie, An Engine, Not a Camera, 63