Lecture Notes in Economics and Mathematical Systems

Name: Lecture Notes in Economics and Mathematical Systems
Brand: Springer New York
SKU: 9780387968537
Price: 49.49 USD
Availability: InStock

Basmann, R.L.; Slottje, D.J.; Hayes, K.; Johnson, J.D.; Molina, D.J.

In this book the foundations and applicability of the Generalized Fechner-Thurstone Utility Function are laid out. It is shown how by removing the constraint of fixed preferences in the neoclassical consumer theory, utility theory can be used to develop non-parametric indices along with elasticities of the marginal rates of substitutions. It is also shown that whereas the existence of a fixed preference utility function is not always guaranteed for different demand functions, there will always exist at least one Generalized Fechner-Thurstone Direct Utility Function. Furthermore, analysis using the Fechner-Thurstone Direct Utility Function is clear and simple and does not rely on ad hoc Taylor expansions. The construction of different true-cost-of-living indices, the comparison of North American consumers, and a habit formation model are developed to show the usefulness of the Generalized Fechner-Thurstone Direct Utility Function.