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A Homothetic Utility is where $$ \forall x,y, \forall a \in \mathbb{R}_+: \ u(ax,ay)=au(x,y) $$ (or its monotonic transformation).

A linear Homothetic utility is defined as $$ \forall x,y, \forall a \in \mathbb{R}_+: \ u(ax+b,ay+c)=au(x+b,y+c) $$ where $b,c$ are constants.

This preference has very similar property as the homothetic preference. In fact, if we simply translate the coordinate system in the direction of (b,c), then the preference becomes homothetic.

Are there any works covering this property? I've checked a lot of theory papers in homothetic preference but found no luck.

Homothetic Preferences by James DOW· and Sergio Ribeiro da Costa WERLANG

Homothetic and weakly homothetic preferences by J.C. Candeal, E. Indurain

Linear-homothetic preferences

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  • $\begingroup$ in the first line, should $au(x +y)$ be $au(x,y)$, as $u$ seems to take 2 arguments? $\endgroup$ – 201p May 27 at 23:53
  • $\begingroup$ @201p You are right, that was a typo $\endgroup$ – High GPA May 28 at 0:03
  • $\begingroup$ @Giskard You are right about a,x,y. b,c are constants $\endgroup$ – High GPA May 30 at 14:26
  • $\begingroup$ Can you give an example of a function $u \neq 0$ satisfying this identity? $\endgroup$ – Bertrand May 30 at 17:13
  • $\begingroup$ If you want to allow for $(b,c)$-translations, your then the preference should instead satisfy $$ \forall x,y, \forall a \in \mathbb{R}_+: \ u(a(x+b),a(y+c))=au(x+b,y+c), $$ but this is equivalent to homotheticity. $\endgroup$ – Bertrand Jun 2 at 10:44

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