A New Approach to Utility Function
This paper treats from an axiomatic point of view the notions of indifference and preference, relative to the consumption of goods. After the introduction and analysis of indifference classes, the notion of the utility function is introduced naturally, a number of axioms giving consistency and ri...
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| Format: | Article |
| Language: | English |
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Danubius University
2015-04-01
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| Series: | Acta Universitatis Danubius: Oeconomica |
| Subjects: | |
| Online Access: | http://journals.univ-danubius.ro/index.php/oeconomica/article/view/2703/2395 |
| Summary: | This paper treats from an axiomatic point of view the notions of indifference and
preference, relative to the consumption of goods. After the introduction and analysis of indifference
classes, the notion of the utility function is introduced naturally, a number of axioms giving
consistency and rigor. The concept of marginal utility is presented in both differentiable and,
especially, in the discretized case. There are introduced new types of discretized marginal utility that
adapts better when analyzing discrete the differential situation. The marginal rate of substitution is
addressed globally, for n goods, obtaining the notions of hyperplane or minimal vector of substitution.
Also, in the discretized case, there are introduced the marginal rates of substitution to the left, right or
bilateral, as well as the adjusted rates, which give more precisely the possibility of consumption of a
good when replaced another. |
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| ISSN: | 2065-0175 2067-340X |