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Experimental test of utility maximization

Author

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  • He, Yuqing

Abstract

The study tests the cardinal utility maximization hypothesis by an experimental procedure in a framework of utility scaling approach following the psychophysical-econometric paradigm, conceived in He (Psychophysical Interpretation for Utility Measures, 2011). It reveals (i) the utility maximization can be tested and has been supported by experimental results; (ii) the utility scaling approach following the psychophysical econometric paradigm offers a new foundation to discuss the utility concept; and (iii) it is necessary to distinguish the perception utility and emotion utility to respectively describe economic choices and enjoyment choices.

Suggested Citation

  • He, Yuqing, 2012. "Experimental test of utility maximization," Economics Discussion Papers 2012-32, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwedp:201232
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    References listed on IDEAS

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    1. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    2. Steffen Andersen & Seda Ertac & Uri Gneezy & Moshe Hoffman & John A. List, 2011. "Stakes Matter in Ultimatum Games," American Economic Review, American Economic Association, vol. 101(7), pages 3427-3439, December.
    3. Slovic, Paul & Lichtenstein, Sarah, 1983. "Preference Reversals: A Broader Perspective," American Economic Review, American Economic Association, vol. 73(4), pages 596-605, September.
    4. L. R. Klein & H. Rubin, 1947. "A Constant-Utility Index of the Cost of Living," Review of Economic Studies, Oxford University Press, vol. 15(2), pages 84-87.
    5. George J. Stigler, 1950. "The Development of Utility Theory. II," Journal of Political Economy, University of Chicago Press, vol. 58, pages 373-373.
    6. K. R. MacCrimmon & M. Toda, 1969. "The Experimental Determination of Indifference Curves," Review of Economic Studies, Oxford University Press, vol. 36(4), pages 433-451.
    7. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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    Cited by:

    1. Green, Jemma & Newman, Peter, 2017. "Citizen utilities: The emerging power paradigm," Energy Policy, Elsevier, vol. 105(C), pages 283-293.

    More about this item

    Keywords

    utility maximization; experiment; Klein-Rubin utility function; perception utility; emotion utility;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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