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Psychophysical foundations of the Cobb–Douglas utility function

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  • Argenziano, Rossella
  • Gilboa, Itzhak

Abstract

Relying on a literal interpretation of Weber’s law in psychophysics, we show that a simple condition of independence across good categories implies the Cobb–Douglas preferences.

Suggested Citation

  • Argenziano, Rossella & Gilboa, Itzhak, 2017. "Psychophysical foundations of the Cobb–Douglas utility function," Economics Letters, Elsevier, vol. 157(C), pages 21-23.
    • Handle: RePEc:eee:ecolet:v:157:y:2017:i:c:p:21-23
    DOI: 10.1016/j.econlet.2017.05.013
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    References listed on IDEAS

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    1. Avraham Beja & Itzhak Gilboa, 1989. "Numerical Representations of Imperfectly Ordered Preferences (A Unified Geometric Exposition," Discussion Papers 836, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Trockel, Walter, 1989. "Classification of budget-invariant monotonic preferences," Economics Letters, Elsevier, vol. 30(1), pages 7-10.
    3. José Faro, 2013. "Cobb-Douglas preferences under uncertainty," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(2), pages 273-285, October.
    4. Rossella Argenziano & Itzhak Gilboa, 2017. "Foundations of Weighted Utilitarianism," Working Papers hal-01933882, HAL.
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    Cited by:

    1. Duffy, Sean & Smith, John, 2020. "An economist and a psychologist form a line: What can imperfect perception of length tell us about stochastic choice?," MPRA Paper 99417, University Library of Munich, Germany.
    2. Yan, Eric & Feng, Qu & Ng, Yew-Kwang, 2021. "Do we need ramsey taxation? Our existing taxes are largely corrective," Economic Modelling, Elsevier, vol. 94(C), pages 526-538.
    3. Matar, Walid, 2018. "Households' response to changes in electricity pricing schemes: Bridging microeconomic and engineering principles," Energy Economics, Elsevier, vol. 75(C), pages 300-308.
    4. Duffy, Sean & Gussman, Steven & Smith, John, 2019. "Judgments of length in the economics laboratory: Are there brains in choice?," MPRA Paper 93126, University Library of Munich, Germany.
    5. Marco Rogna, 2020. "Microeconomic models of a production economy with environmental externalities," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(3), pages 2625-2650, March.
    6. Dziewulski, Paweł, 2020. "Just-noticeable difference as a behavioural foundation of the critical cost-efficiency index," Journal of Economic Theory, Elsevier, vol. 188(C).

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    More about this item

    Keywords

    Cobb–Douglas; Weber’s law; Semi-order;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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