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A submodular utility function is characteristic of substitute goods. For example, an apple and a bread loaf can be considered substitutes: the utility a person receives from eating an apple is smaller if he has already ate bread (and vice versa), since he is less hungry in that case. A typical utility function for this case is given at the right.
These functions are commonly used as examples in consumer theory. The functions are ordinal utility functions, which means that their properties are invariant under positive monotone transformation. For example, the Cobb–Douglas function could also be written as: + . Such functions only become interesting when there are two or more ...
Most utility functions used for modeling or theory are well-behaved. They are usually monotonic and quasi-concave. However, it is possible for rational preferences not to be representable by a utility function. An example is lexicographic preferences which are not continuous and cannot be represented by a continuous utility function. [8]
This category is for specific utility functions, properties or classes of utility functions. Pages in category "Utility function types" The following 43 pages are in this category, out of 43 total.
Leontief utility functions represent complementary goods. For example: Suppose is the number of left shoes and the number of right shoes. A consumer can only use pairs of shoes. Hence, his utility is (,).
Although there are at least four sources of uncertainty - the attribute outcomes, and a decisionmaker's fuzziness about: a) the specific shapes of the individual attribute utility functions, b) the aggregating constants' values, and c) whether the attribute utility functions are additive, these terms being addressed presently - uncertainty ...
For example, a person's demand for nails is usually independent of his or her demand for bread, since they are two unrelated types of goods. Note that this concept is subjective and depends on the consumer's personal utility function. A Cobb-Douglas utility function implies that goods are independent.
Perfect substitutes have a linear utility function and a constant marginal rate of substitution, see figure 3. [7] If goods X and Y are perfect substitutes, any different consumption bundle will result in the consumer obtaining the same utility level for all the points on the indifference curve (utility function). [8]