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In economics, utility is a measure of a certain person's satisfaction from a certain state of the world. Over time, the term has been used with at least two meanings. In a normative context, utility refers to a goal or objective that we wish to maximize, i.e., an objective function.
A single-attribute utility function maps the amount of money a person has (or gains), to a number representing the subjective satisfaction he derives from it. The motivation to define a utility function comes from the St. Petersburg paradox: the observation that people are not willing to pay much for a lottery, even if its expected monetary gain is infinite.
In economics, a cardinal utility expresses not only which of two outcomes is preferred, but also the intensity of preferences, i.e. how much better or worse one outcome is compared to another. [1] In consumer choice theory, economists originally attempted to replace cardinal utility with the apparently weaker concept of ordinal utility.
Category utility is a measure of "category goodness" defined in Gluck & Corter (1985) and Corter & Gluck (1992).It attempts to maximize both the probability that two objects in the same category have attribute values in common, and the probability that objects from different categories have different attribute values.
The theory of subjective expected utility combines two concepts: first, a personal utility function, and second, a personal probability distribution (usually based on Bayesian probability theory). This theoretical model has been known for its clear and elegant structure and its considered by some researchers to be "the most brilliant axiomatic ...
In economics, compensating variation (CV) is a measure of utility change introduced by John Hicks (1939). 'Compensating variation' refers to the amount of additional money an agent would need to reach their initial utility after a change in prices, a change in product quality, or the introduction of new products.
Econodynamics establishes relationship between the real wealth and abstract concepts of value, utility and entropy. The artificial products created by humans: buildings, machines, vehicles, sanitation, clothes, home appliances and so on, can be sorted and counted, so that one consider the amounts of quantities in natural units of measurement Q ...
Ordinal utility contrasts with cardinal utility theory: the latter assumes that the differences between preferences are also important. In u the difference between A and B is much smaller than between B and C, while in v the opposite is true. Hence, u and v are not cardinally equivalent. The ordinal utility concept was first introduced by ...