# Questions tagged [measuring-utility]

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### 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 ...
132 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 ...
129 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 ...
648 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 ...
508 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 ...
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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. ...
54 views

### Computing expectation of logit error conditional on choice

Consider a standard multinomial logit choice model. A consumer chooses a good $j$ from a choice set $J$ by choosing the good with the highest realized utility where the utility of good $j$ is given by ...
46 views

### Measuring and assigning utility numbers

I was recently introduced to the concept of cardinal utility. In real life, how do we assign these utility levels? For example if i wanted to assign numbers to my own utility indifference curve for ...
101 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 ...
35 views

### What's special about Cobb–Douglas utility relative to the rest of the CES family?

My question concerns CES utility functions, which have the form $$u(x) = \left(\sum_{j=1}^n a_j x_j^{\rho} \right)^{1/\rho}$$ for utility parameters $a_j$, an elasticity parameter $\rho$, and some ...
297 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 ...
333 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 ...
279 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 ...
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### 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 ...
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### 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 ...
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### Is it accurate to state that an economist cannot assign a true numerical value for utility?

Investopedia article - What is the utility function and how is it calculated? https://www.investopedia.com/ask/answers/072915/what-utility-function-and-how-it-calculated.asp Article describes ordinal ...
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### 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 ...
102 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 ...
59 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 ...
85 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 ...
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### Utility Function Challenge

A utility function is given for two goods Good 1 and Good 2 $$U=f({G_1},{G_2})=45{{G_1}^{0.7}}{{G_2}^{0.3}}$$ Did I get this right? the marginal utility functions with respect to G1 and G2 will be ...
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 \$...