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Psychophysical Foundations of the Cobb-Douglas Utility Function

Author

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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," HEC Research Papers Series 1269, HEC Paris.
    • Handle: RePEc:ebg:heccah:1269
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    References listed on IDEAS

    as
    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. Rossella Argenziano & Itzhak Gilboa, 2017. "Foundations of Weighted Utilitarianism," Working Papers hal-01933882, HAL.
    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. Trockel, Walter, 1989. "Classification of budget-invariant monotonic preferences," Economics Letters, Elsevier, vol. 30(1), pages 7-10.
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    Cited by:

    1. 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.
    2. 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.
    3. Dziewulski, Paweł, 2020. "Just-noticeable difference as a behavioural foundation of the critical cost-efficiency index," Journal of Economic Theory, Elsevier, vol. 188(C).
    4. 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.
    5. 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.
    6. 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.

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    More about this item

    Keywords

    Cobb-Douglas; Webers Law; Semi-Order;
    All these keywords.

    JEL classification:

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

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    This paper has been announced in the following NEP Reports:

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