Questions tagged [measuring-utility]
The measuring-utility tag has no usage guidance.
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Is it considered acceptable or unacceptable to use currency as a measure of utility?
There will always exist at least one economist who condones measuring utility in US dollars and another who does not. However, I am wondering which way the majority of contemporary economists lean.
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2answers
68 views
Fair value that a risk averse individual would pay to enter a gamble
Introduction
Assuming an individual (or corporation) with risk aversion and a von Neumann-Morgenstern utility curve and given a gamble g with E(g) > 0.
From what I researched, certainty equivalent is ...
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1answer
55 views
Relationship between expected utility and independence axiom
Jonathan Levin in "Choice under Uncertainty" wrote in Theorem 1 " A complete and transitive preference relation on a set of lotteries P satisfies continuity and independence if and only if it admits ...
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0answers
18 views
Do any social welfare functionals meet all of Arrow’s conditions, plus absolute-scale full-comparability, but no other informational condition?
I’ve been trying to think of social welfare functionals which meet all of Arrow’s conditions–––unrestricted domain, weak Pareto, independence of irrelevant utilities, and non-dictatorship (see this ...
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1answer
27 views
finding optimal values of quantities through utility function when MRS is 1 and price ratio is 1:2 [closed]
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
224 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
259 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
296 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 ...
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0answers
48 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
81 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
217 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
97 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 ...
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0answers
145 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
376 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
118 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
39 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 ...
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0answers
84 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
178 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(...
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1answer
194 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 ...
