# utility function

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## Utility function

A mathematical expression that assigns a value to all possible choices. In portfolio theory, the utility function expresses the preferences of economic entities with respect to perceived risk and expected return.

## Utility Function

The expression of desire in mathematical terms. Utility function is important in investing; it may show the usefulness of investing in some securities as opposed to different ones. For instance, a stock with low risk and a high return has a higher utility function than a stock with high risk and a low return. See also: Marginal Utility.

## utility function

a function denoting the quantities of goods and services that an individual consumes, of the form:

where Ut = total utility and x1 ,x2 . products consumed.

In order to achieve CONSUMER EQUILIBRIUM, the individual will select a combination of products, in line with his preferences, that maximizes his TOTAL UTILITY from his given income. See

CARDINAL UTILITY, ORDINAL UTILITY, MARGINAL UTILITY utility maximization see CONSUMER EQUILIBRIUM.

References in periodicals archive ?
The multi-attribute utility theory was used for the calculation of the overall utility functions used to define the ranking of strategies for minimization of risks caused by information asymmetries in the construction phase offered by Schieg (2008).
Formed utility functions show that in totality of characteristics the most durable are the samples obtained under medium pressure during the printing nip at double side intaglio printing.
Specifically, assume that the utility functions for general goods consumption and computers have different degrees of curvature:
They integrated utility functions with the variable interdependent parameters method to evaluate alternatives through an additive value function regarding mean time to repair, contract cost, and the geographical spread of the candidate's service network, the candidate's reputation and the compatibility of company cultures.
Furthermore, since money is used to acquire goods and services that in turn impacts consumption, it is posited that the income velocity of money is positively related to the marginal propensity to consume, given that money and consumption are arguments in the utility function of the representative agent.
Because health is assumed to be exogenous in the part of their paper assessing the gain from mortality risk reduction, their approach is equivalent to assuming that agents have additively separable utility functions whose (exogenous) discount function is not necessarily exponential.
Markets attempt to reconcile the divergent interests of buyer and seller, which are represented by two different utility functions.
Examples of micro-based utility functions are put forth by Jeremy Bentham, John Rawls, and Vilfredo Pareto.
This system will be the central information system and backbone of the airplane's networks and electronics and will host the airplane's avionics, maintenance and utility functions.
In Section 3 we consider the notion of risk vulnerability introduced by Gollier and Pratt [3] and show that operator monotone utility functions are risk vulnerable.
Partial utility functions are not presented as it is not necessary to be acquainted with them in order to comprehend the discussed use of robustness techniques.

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