Timeline for Utility functions and positive monotone transformations
Current License: CC BY-SA 4.0
7 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Nov 26, 2020 at 17:18 | vote | accept | Lifeni | ||
| Nov 26, 2020 at 17:17 | comment | added | Bayesian | See my comment if you compare any two bundles then you have u(x1,x2) > u(y1,y2) if and only if g(u(x1,x2)) > g(u(y1,y2)) by definition of g being a positive monotone transformation. Therefore the ranking is not changed. | |
| Nov 26, 2020 at 17:06 | comment | added | Lifeni | Hi Bayesian that makes sense and the intuition in the link makes sense but have can I formally show that the ranking of the two indifference curves is the same when 𝑔(𝑧) is monotonous? | |
| Nov 26, 2020 at 16:56 | comment | added | 1muflon1♦ | @Lifeni if you think this answer answered your question consider accepting it. | |
| Nov 26, 2020 at 16:55 | comment | added | Bayesian | You should also see that if you prefer bundle x1,x2 to y1,y2 then it must be that u(x1,x2) > u(y1,y2). If you now apply a positive monotone transformation g, you can see that u(x1,x2) > u(y1,y2) if and only if g(u(x1,x2)) > g(u(y1,y2)). | |
| Nov 26, 2020 at 16:53 | comment | added | Lifeni | Nice that makes sense. Thank you | |
| Nov 26, 2020 at 16:47 | history | answered | Bayesian | CC BY-SA 4.0 |