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Experimental test of utility maximization

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  • He, Yuqing

Abstract

The study tests the cardinal utility maximization hypothesis by an experimental procedure in a framework of utility scaling approach following the psychophysical-econometric paradigm, conceived in He (Psychophysical Interpretation for Utility Measures, 2011). It reveals (i) the utility maximization can be tested and has been supported by experimental results; (ii) the utility scaling approach following the psychophysical econometric paradigm offers a new foundation to discuss the utility concept; and (iii) it is necessary to distinguish the perception utility and emotion utility to respectively describe economic choices and enjoyment choices.

Suggested Citation

  • He, Yuqing, 2012. "Experimental test of utility maximization," Economics Discussion Papers 2012-32, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:201232
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    References listed on IDEAS

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    1. Daniel Kahneman & Peter P. Wakker & Rakesh Sarin, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 375-406.
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    6. L. R. Klein & H. Rubin, 1947. "A Constant-Utility Index of the Cost of Living," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 15(2), pages 84-87.
    7. George J. Stigler, 1950. "The Development of Utility Theory. II," Journal of Political Economy, University of Chicago Press, vol. 58(5), pages 373-373.
    8. K. R. MacCrimmon & M. Toda, 1969. "The Experimental Determination of Indifference Curves," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 36(4), pages 433-451.
    9. He, Yuqing, 2011. "Psychophysical interpretation for utility measures," Economics Discussion Papers 2011-50, Kiel Institute for the World Economy (IfW Kiel).
    10. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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    Cited by:

    1. Green, Jemma & Newman, Peter, 2017. "Citizen utilities: The emerging power paradigm," Energy Policy, Elsevier, vol. 105(C), pages 283-293.

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    More about this item

    Keywords

    utility maximization; experiment; Klein-Rubin utility function; perception utility; emotion utility;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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