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A consumer's indirect utility (,) can be computed from their utility function (), defined over vectors of quantities of consumable goods, by first computing the most preferred affordable bundle, represented by the vector (,) by solving the utility maximization problem, and second, computing the utility ((,)) the consumer derives from that ...
the indirect utility function has (assuming an interior solution) the form: v i ( p , m ) = v i ( p ) + m {\displaystyle v_{i}(p,m)=v_{i}(p)+m} which is a special case of the Gorman form.
Direct reciprocity was proposed by Robert Trivers as a mechanism for the evolution of cooperation. [1] If there are repeated encounters between the same two players in an evolutionary game in which each of them can choose either to "cooperate" or "defect", then a strategy of mutual cooperation may be favoured even if it pays each player, in the short term, to defect when the other cooperates.
One use of the indirect utility concept is the notion of the utility of money. The (indirect) utility function for money is a nonlinear function that is bounded and asymmetric about the origin. The utility function is concave in the positive region, representing the phenomenon of diminishing marginal utility. The boundedness represents the fact ...
The indirect utility function is a function of commodity prices and the consumer's income or budget. Indirect utility function v(p, w) where p is a vector of commodity prices, and w is an amount of income. Important assumption is that consumers have locally nonsatiated preferences.
The black walnut secretes a chemical from its roots that harms neighboring plants, an example of competitive antagonism.. In ecology, a biological interaction is the effect that a pair of organisms living together in a community have on each other.
Shephard's lemma is a result in microeconomics having applications in the theory of the firm and in consumer choice. [1] The lemma states that if indifference curves of the expenditure or cost function are convex, then the cost-minimizing point of a given good with price is unique.
A single-attribute utility function maps the amount of money a person has (or gains), to a number representing the subjective satisfaction he derives from it. The motivation to define a utility function comes from the St. Petersburg paradox: the observation that people are not willing to pay much for a lottery, even if its expected monetary gain is infinite.