More recent work in microeconomics has revealed the position of classical utility theory
as a rather extreme special case of a phenomenon found by many arguments to have much more complexity than the simple classical version.
Furthermore, in his treatment of the economics of taxation, Rothbard admits the theoretical possibility that greater taxation of labor income could induce an increase in labor supplied, going so far as to mention a substitution and an income effect, which his initial treatment of utility theory
and demand fails to mention and indeed directly contradicts (p.
Given the modern, revealed preference understanding of utility, there is little justification for excluding households that make compensation demands (reported, most likely, in terms of WTP to avoid or prevent a similar injury) but that express their motivations in ways that are inconsistent with the most individualistic and simplistic textbook treatments of economic utility theory
Prospect theory suggests decision makers exhibit three consistent violations of the assumptions of utility theory
in this two-staged process.
This measure, based on the theoretical foundations of utility theory
, stems directly from the individual's utility function, thus fully reflecting his or her preferences.
This formulation of EV has all of the assumptions of discrete choice analysis and is well grounded in random utility theory
The fundamental assumption in utility theory
is that the decision maker always chooses the alternative for which the expected value of the utility is maximal.
As noted in endnote 8, a significant number of child subjects exhibited decisions not consistent with expected utility theory
We also tested the hypothesis that the proportion of utility theory
responses was the same for k = 3 and k = 4 mugs.
Problems accompany the recognition of a moral dimension to consumer choice, since utility theory
- if it is to be useful empirically - must incorporate an intersubjective specification of the objects of preference.
of California, Berkeley) have assembled this legal textbook on experimental law and economics around the Expected Utility Theory
, a concept that studies how laws are designed to alter behaviors.
Basic material on utility theory
and insurance goes back to Borch (1968), using the utility concept of von Neumann and Morgenstern (1944).