# Questions tagged [utility]

Utility, or usefulness, is the (perceived) ability of something to satisfy needs or wants.

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### Utility theory and portfolio optimization: utility of what exactly?

In finance, a common problem is selection of an optimal portfolio given some constraints (e.g. budget constraint and perhaps nonnegative allocation constraint). One can define the optimization problem ...
28 views

### Shortcuts for elasticity of substitution

How can I find the elasticity of substitution (I know the definition) if I know the utility function $u(x,y)$? I know its increasing in $x$ and $y$, etcetera, and has everything else you want from a ...
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### Budget Constraint in Utility Maximisation Problem with Lagrange Multipliers

Lets say we have a utility function $U: \mathbb{R}^{2} \to \mathbb{R}$ given by $U(x,y)$ and a binding budget constraint $p_{x} x + p_{y} y = m$, where $p_{x}, p_{y}$ are prices of goods $x,y$ and $m$ ...
27 views

### For the case of two goods, give an example of preferences that are represnted by a continuous utility function that allows for fat indifference curves

The question in the title sounds like a trick question, due to the monotonicity property that indifference curves have, such that for two goods x and y, strong monotonicity implies y > x. Possible ...
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### How to prove monotonic transformation of the function and equivalence?

At the microeconomics course I have to prove monotonic transformation of the function U(x,y) = A(x^a)(y^b) into U(x,y) = (x^0.5)(y^0.5) Since the MRS are ay/bx and x/y resp. I can obviously only ...
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### Study whether $\succsim$ represented by $u(x)=\lfloor x \rfloor$ is continuous

Using the following definition of continuity: $\succsim$ is continuous if for any bundles $x,y,z$ such that x$\succ$y$\succ$z, there exists $\alpha \in (0,1)$ such that $\alpha x + (1-\alpha)z \sim y$....
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### Who took utimatum game and dictator game as the evidence against Homo Economicus assumption of individual utility maximization?

Wikipedia and this McGill University page states that the two games "have been taken as both evidence for and against the Homo economicus assumptions of rational, utility-maximizing, individual ...
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### Modeling risk aversion. Expected utility function

I want to model an Expected Utility Function for risk aversion but my problem is uncertainty in itself. I want a function(a special case) f(x, y) =\left\{\begin{matrix} h(bx^{1-C}+ay^{1-C}),C\neq 1\...
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### Framing Effect Risk-Aversion Risk-Pursuit

I am an economics' graduate seeking to study Law and I want to illustrate the importance of legal certainty. Penalties, Costs are negativelly framed. I am trying to word. 200 dollars with 50% ...
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### Rent dissipation meaning?

What is Rent dissipation? Please explain with an example. I tried to search it on the internet about it. And I couldn't find anything in simple language. It was the esoteric language and was unclear. ...
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### What would the indifference curve of min{√x,y} looks like?

The locus of kinks would follow x=y^2 but what would the arms look like?
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### A case where the solution to Expenditure Minimisation Problem is not a solution to Utility Maximistion Problem

I am looking for a preference relation which satisfies the above property.
When we differentiate the utility function with respect to some input $x_i$, we get a number that tells us how "fast" the utility function is changing at some point with respect to $x_i$. Doesn't that ...