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 ?
Figure 3 compares the utility function against the two prior densities.
Utility Application: Utility function have been applied in wireline and wireless network resource allocation for many years.
As illustrated in Proposition 1, the relationship between the concavity of the utility function and self-insurance is no longer unambiguous in a simple two-period model.
The fact that individuals have different utility functions lies at the heart of the problem of making inferences about an individual consumer's behavior based on the estimation of aggregatedemand functions.
Under the current state, for the same fault, the greater the value of the utility function is, the higher the satisfaction of its acceptance of the squad's repair is; that is, the stronger the squad's capability to repair the fault is, the more competent the squad for the fault is.
where [alpha] and [gamma] are scalars, [beta] is a column vector of the coefficients for the controls x, and g is a CRRA utility function for the relation with income
Second, the utility function values for four (n) relationships and six (m) strategies ([U.
Algorithm for solving multicriteria problem of choice of banknote deterioration characteristics using the utility function, Research Bulletin of National Technical University of Ukraine Kyiv Polytechnic Institute 1: 68-75.
But using surveys to infer WTP/WTA amounts does not rest upon the further assumption that this common utility function is cardinal.
Some of contemporary theories of consumer's behaviour are models of expected utility, which means total utility functions in the conditions of risk and uncertainty based on O.
To mitigate the impact of the zero-consumption region of the utility function, they emphasize an alternative measure based upon a linearized leisure demand curve.
The condition of applying the additive utility function is that the attributes should be additively independent.

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