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A New Approach to Utility Function

Author

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  • Catalin Angelo Ioan

    (Danubius University of Galati)

Abstract

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.

Suggested Citation

  • Catalin Angelo Ioan, 2015. "A New Approach to Utility Function," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 11(2), pages 194-223, April.
    • Handle: RePEc:dug:actaec:y:2015:i:2:p:194-223
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    File URL: http://journals.univ-danubius.ro/index.php/oeconomica/article/view/2703/2395
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    References listed on IDEAS

    as
    1. Catalin Angelo Ioan & Gina Ioan, 2011. "The Extreme of a Function Subject to Restraint Conditions," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 3(3), pages 203-207, June.
    2. Catalin Angelo Ioan & Gina Ioan, 2011. "A generalization of a class of production functions," Applied Economics Letters, Taylor & Francis Journals, vol. 18(18), pages 1777-1784, December.
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    Cited by:

    1. Catalin Angelo Ioan & Gina Ioan, 2012. "On the General Theory of Production Functions," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 5(5), pages 225-238, October.
    2. Catalin Angelo Ioan & Gina Ioan, 2012. "The Problem of Efficiency of the Consumption or Production," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 4(4), pages 117-125, August.
    3. Catalin Angelo Ioan & Gina Ioan, 2012. "Discussions on n Substitutable Goods Production and Consumption," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 4(4), pages 168-176, August.

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