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In economics, elasticity of intertemporal substitution (or intertemporal elasticity of substitution, EIS, IES) is a measure of responsiveness of the growth rate of consumption to the real interest rate. [1] If the real interest rate rises, current consumption may decrease due to increased return on savings; but current consumption may also ...
Isoelastic utility for different values of . When > the curve approaches the horizontal axis asymptotically from below with no lower bound.. In economics, the isoelastic function for utility, also known as the isoelastic utility function, or power utility function, is used to express utility in terms of consumption or some other economic variable that a decision-maker is concerned with.
Constant elasticity of substitution (CES), in economics, is a property of some production functions and utility functions. Several economists have featured in the topic and have contributed in the final finding of the constant. They include Tom McKenzie, John Hicks and Joan Robinson. The vital economic element of the measure is that it provided ...
v. t. e. The Ramsey–Cass–Koopmans model, or Ramsey growth model, is a neoclassical model of economic growth based primarily on the work of Frank P. Ramsey, [1] with significant extensions by David Cass and Tjalling Koopmans. [2][3] The Ramsey–Cass–Koopmans model differs from the Solow–Swan model in that the choice of consumption is ...
Two views of the utility graph, also known as the Thomsen graph or. The classical mathematical puzzle known as the three utilities problem or sometimes water, gas and electricity asks for non-crossing connections to be drawn between three houses and three utility companies in the plane. When posing it in the early 20th century, Henry Dudeney ...
In decision theory, the expected value of sample information (EVSI) is the expected increase in utility that a decision-maker could obtain from gaining access to a sample of additional observations before making a decision. The additional information obtained from the sample may allow them to make a more informed, and thus better, decision ...
Indifference curve. In economics, an indifference curve connects points on a graph representing different quantities of two goods, points between which a consumer is indifferent. That is, any combinations of two products indicated by the curve will provide the consumer with equal levels of utility, and the consumer has no preference for one ...
Economics. In decision theory, the von Neumann–Morgenstern (VNM) utility theorem demonstrates that rational choice under uncertainty involves making decisions that take the form of maximizing the expected value of some cardinal utility function. This function is known as the von Neumann–Morgenstern utility function.