Questions tagged [utility]

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

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Cobb-Douglas and Logarithm Utility Functions

Suppose I have a consumer with a utility function $U(x,y) = x^\alpha y ^{1-\alpha}$ where $a \in (0,1)$. Suppose this consumer has wealth $w$ and the prices for $x$ and $y$ are $p_x$ and $p_y$ ...
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Finding demand function given a utility min(x,y) function

I am confused about a particular point regarding finding a demand function. All the problems in this practice set I am doing have involved applying the method of Lagrangian multipliers. But I am ...
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Why is CRRA utility often used in macroeconomics DSGE model?

As title says, why is CRRA utility often used in macroeconomics DSGE model? That is, the form of $$u(c_t) = \frac{c_t^{1-\sigma}}{1-\sigma}$$ I cannot find any theoretical background around this........
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The relationship between the expenditure function and many others!

I dont understand the relationships between Hicksian demand, walrasian demand (marshallian), the expenditure function and the indirect utility function (including the value function V(b)). I have ...
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Is it possible to derive indifference curves given marshallian demand function?

In a two good world, will a marshallian demand function the likes of D(p,m) where p is the price of one good and m the income yield a utility function or ...
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Empirical estimates of CRRA and CARA utility

I am working on macroeconomic model and I need to calibrate it. I am looking primarily for a statistically-founded estimate for the coefficient of relative risk aversion in the CRRA utility function ...
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Is risk aversion bounded in CRRA utility?

For instance, Cagetti (2003) estimates ρ > 2 by targeting the median wealth of households, Gourinchas and Parker (2002) find ρ < 2 by targeting the mean consumption of households, Chetty (2006), ...
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When can one safely talk about decreasing marginal utility?

One thing I hear a lot is talk of decreasing marginal utility—the idea being that additional units of a good become progressively less attractive the more units of that good one has already. However, ...
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Utility and the tyranny of a minority

Follow on to this question. Using similar constraints: The constraints regarding the system I'm modeling are (and looking for a general solution to): Marginal Utility for every unit of a ...