The Generalized Fechner-Thurstone Direct Utility Function and Some of its Uses

R.L. Basmann · D.J. Slottje · K. Hayes · J.D. Johnson · D.J. Molina

2013년 11월 · Lecture Notes in Economics and Mathematical Systems 316권 · Springer Science & Business Media

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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.