Questions tagged [measuring-utility]

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1answer
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finding optimal values of quantities through utility function when MRS is 1 and price ratio is 1:2 [on hold]

so this is a somewhat simple question but im stumped, here's why: given the utility U=2$X_1$+2$X_2$ where $P_1$$X_1$+$P_2$$X_2$=20 and $P_1$=0.5$P_2$ the question asks to find optimal values of $...
4
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2answers
81 views

What are the units of utility?

I'm trying to show a result that involves utility and money (the latter is in dollars). I would like to know if it is safe to assume that the units of utility is dollars? After all, in auction ...
4
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2answers
112 views

Purpose of a monotonic transformations in utility functions

Based on my economics book, monotonic transformations for a utility function can look something like this: $f(u) = u + 17 $ or even like this: $f(u) = u^3$ That being said what it purpose in the ...
1
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1answer
184 views

What is the concept of ordinal utility?

I have read in many books that since utility cannot be measured - so ordinal concept or comparison concept is used. If that is so, how can one define a mathematical function for utility which gives a ...
1
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0answers
41 views

Anscombe and Auman Expected Utility

I would like to hopefully get some insights on the Anscombe and Aumann Expected utility. I've read some proofs and understood the Expected Utility Theorem (VNM) which allows us to approach consumers ...
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1answer
79 views

Do we really need accurate utility functions?

Knowing that a utility function's primary purpose it to be used as a tool to rank consumption bundles, I was wondering: "do we really need to be concerned with accurate identification utility ...
1
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1answer
170 views

Why are there infinitely many indifference curves?

If an indifference curve shows quantities where a consumer's utility from consuming two goods are equal, then why are there infinitely many indifference curves? From the diagram, you can have Q1,Q2 on ...
5
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1answer
93 views

Indifference curve - Does $dU = 0$ hold in higher dimensions? / Problem of integrability

In two dimensions, we have on an indifference curve that $dU=0$. Does this apply to indifference objects in higher dimensions? I was thinking that if $dU > 0$, then one is moving to a higher ...
1
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0answers
126 views

Estimate the Utility function for the Principal-Agent problem (real case)

I have a company and I have to set the wage to my employer based on different levels of revenues. Examples W_1 if Revenue = 100k ...
7
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1answer
292 views

Selecting the best utility function for households

I have little to no background in micro, but I'm learning about utility functions. It seems that there are many forms of utility functions for households. In general terms, how does one go on to ...
7
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1answer
98 views

Mythbusters - Determine optimal boarding strategy based on time and satisfaction score

Most airlines board passengers starting from the back of the plane and then working their way towards the front (after boarding priority classes and passengers). In an episode of Mythbusters, Adam ...
0
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1answer
37 views

How to model best combination of resources

I don't have an economics background, I come from CS. I am sorry if this question seems weird. We want to model the combination of a set of resources to either answer the cost of the model, minimize ...
0
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0answers
82 views

Is utility function used in customer data/profile analysis? What alternatives in practice?

Utility function is great theoretical concept but is it used in customer data analysis or in building customer profile (e.g. from Big data or cash register/checkout data, ecommerce history) or in ...
3
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1answer
151 views

Equality of ordinal vs. cardinal utility under transformations - who made the distinction first?

In the context of preferences among items or choices under certainty, we can consider ordinal value function (viz., utility functions) to be equivalent under monotonously increasing transformations $u(...
1
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1answer
176 views

Measuring “Intangible Utility” (reference request/methodological discussion)

I was just listening to some music and I found myself thinking about how I might measure the utility I experience from listening to it. I know there has been a lot of work done with measuring utility ...