In my text (Investments by BKM), the investor's mean-variance utility (given as $U = E[R] - \frac12A\sigma^2$) is stated to be the objective function we wish to maximize. Upon further digging, it seems that this stems from the assumption of quadratic utility functions ($U = aW - bW^2$). This kind of bothers me since I see two unrealistic properties for quadratic utility functions. (1) They exhibit increasing absolute risk aversion, and (2) they achieve a satiation point, beyond which money/return begins to have negative value.
So why do we assume quadratic utility? Are there no other simple, more realistic functional forms for utility that would still lead to a reasonably clean portfolio optimization theory? Or are the issues I cited about the quadratic just negligible in practice?