ECON 326 Chapter Notes -Jeremy Bentham, Convex Set, Utility
12 Feb 2014
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The utility function the primary means by which economists examine individual choices. Preference: a certain individual will state that he or she prefers a certain situation to another or finds one situation more attractive to another situation. This property assumes that an individual isn"t indecisive, and that he or she completely understands and can make up his or her mind about the desirability of two alternatives. The property also assumes that one individual cannot state that he or she prefers a to b and that he or she prefers. However this conclusion should be modified in situations where the individual is unaware of the consequences associated with the decision that he or she has made: continuity. This property makes the assumption that if an individual prefers. A to b then conditions suitably close to a are also preferred to b. This assumption is useful when analyzing individuals" decisions when there are changes in income and prices.
