Advertisement

Utility Function

Chapter
  • 841 Downloads
Part of the SpringerBriefs in Economics book series (BRIEFSECONOMICS)

Abstract

The utility function is an important concept when modelling decision making under uncertainty. This chapter provides a description of different forms of the utility function including the expected utility model (EU-model) and its derived forms.

Keywords

Expected utility Utility function Linear utility function Leontief utility function Cobb-Douglas utility function Cardinal utility function Neumann-Morgenstern utility function CARA DARA Rate of substitution in utility (RSU) Risk aversion Risk-neutral EV-utility function 

References

  1. Anderson, J., Dillon, J., & Hardaker, J. (1977). Agricultural decision analysis. Ames: Iowa State University Press.Google Scholar
  2. Arrow, K. (1965). Aspects of the theory of risk bearing academic bookstore. Finland: Helsinki.Google Scholar
  3. Gravelle, H., & Rees, R. (2004). Microeconomics (3rd ed.). Harlow, UK: Pearson Education.Google Scholar
  4. Hardaker, J., Huirne, R., Anderson, J., & Lien, G. (2004). Coping with risk in agriculture (2nd ed.). Wallingford: CABI Publishing.Google Scholar
  5. Hicks, J. (1946). Value and capital (2nd ed.). Oxford, UK: Oxford University Press.Google Scholar
  6. Pratt, J. (1964). Risk aversion in the small and in the large. Econometrica 122–136.Google Scholar
  7. Rasmussen, S. (2006). Optimizing production under uncertainty. Generalization of the State-Contingent approach and comparison with the EV model. FOI Working Papers no. 5/2006, Institute of Food and Resource Economics, The Royal Veterinary and Agricultural University, Copenhagen.Google Scholar
  8. Schoemaker, P. (1982). The expected utility model: Its variants, purposes, evidence and limitations. Journal of Economic Literature 529–563.Google Scholar

Copyright information

© Svend Rasmussen 2011

Authors and Affiliations

  1. 1.Institute of Food and Resource EconomicsUniversity of CopenhagenFrederiksberg C, CopenhagenDenmark

Personalised recommendations