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Psychophysical foundations of the Cobb–Douglas utility function

Author

Listed:
  • Argenziano, Rossella
  • Gilboa, Itzhak

Abstract

Relying on a literal interpretation of Weber’s law in psychophysics, we show that a simple condition of independence across good categories implies the Cobb–Douglas preferences.

Suggested Citation

  • Argenziano, Rossella & Gilboa, Itzhak, 2017. "Psychophysical foundations of the Cobb–Douglas utility function," Economics Letters, Elsevier, vol. 157(C), pages 21-23.
  • Handle: RePEc:eee:ecolet:v:157:y:2017:i:c:p:21-23
    DOI: 10.1016/j.econlet.2017.05.013
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    References listed on IDEAS

    as
    1. Avraham Beja & Itzhak Gilboa, 1989. "Numerical Representations of Imperfectly Ordered Preferences (A Unified Geometric Exposition," Discussion Papers 836, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. José Faro, 2013. "Cobb-Douglas preferences under uncertainty," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(2), pages 273-285, October.
    3. Trockel, Walter, 1989. "Classification of budget-invariant monotonic preferences," Economics Letters, Elsevier, vol. 30(1), pages 7-10.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Cobb–Douglas; Weber’s law; Semi-order;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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