Ordinal Utility Function
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An Ordinal Utility Function is a subjective utility function that is a relative function.
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- Counter-Example(s):
- See: Ordinal Scale, Economic Theory, Utility.
References
2015
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/ordinal_utility Retrieved:2015-4-4.
- Ordinal utility theory states that while the utility of a particular good or service cannot be measured using a numerical scale bearing economic meaning in and of itself, pairs of alternative bundles (combinations) of goods can be ordered such that one is considered by an individual to be worse than, equal to, or better than the other. This contrasts with cardinal utility theory, which generally treats utility as something whose numerical value is meaningful in its own right.
The concept was first introduced by Pareto in 1906.
- Ordinal utility theory states that while the utility of a particular good or service cannot be measured using a numerical scale bearing economic meaning in and of itself, pairs of alternative bundles (combinations) of goods can be ordered such that one is considered by an individual to be worse than, equal to, or better than the other. This contrasts with cardinal utility theory, which generally treats utility as something whose numerical value is meaningful in its own right.
1960
- Koopmans, Tjalling C. “Stationary ordinal utility and impatience." Econometrica: Journal of the Econometric Society (1960): 287-309.
- QUOTE: … that have made the construction of cardinal utility possible3 (such as choice between uncertain prospects, or stochastic choice, or independence of commodity groups in the preference structure) it will be necessary to express it in terms of an ordinal utility function, that is, a …