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 ?
We consider the multilinear form of the utility function and show the results for a two-attribute problem, although the result is generalizable for more attributes using the same principles.
Therefore, the uplink utility function is introduced to evaluate the network performance under different uplinks with different transmission distances.
The utility function of an individual under coercion from the full social income maximizes when the rate of technical substitution in consumption (the slope of the curve of indifference of the maximizer individual, denoted Ui) is equal to the technical rate of substitution in production (slope of the curve of production possibilities, denoted CPP, of the maximizer individual), i.e.
However, in the small, a change in the utility function u(y) that increases the Schwarzian measure results in a utility function that dislikes any change in the distribution for income that induces an increase in downside risk for the distribution of u(y), while inducing an unfavorable change in its skewness.
In this paper, the utility function for the principal is exponential function and the utility function for the agent is linear function.
The posterior distribution of covariance matrix [summation] describes the shape of the utility function in each direction and the uncertainty in terms of magnitude.
Utility function of [U.sub.i] (p) is continuous and quasi convex in p.
In these circumstances, second order expectations infiltrate the utility function and create a more realistic picture.
To accommodate for this cost, the Utility Function can be modified to include a cost penalty in the terms of a cost per 'util' - units of utility.
The GPS location of each parking spot, current occupation status, and related parking information that is required to calculate the utility function is also transferred to the personal navigation device.
In this paper, we assume that the utility function of each customer, when the impatience degree is [theta] and quoted lead time is d;, is given by
However, the analytical solutions to the above HJB equations can be derived when the utility function is a HARA function [16].

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