Defined as you propose -- a quantity that is maximized by whatever people do -- what could it possibly mean to say it is linear or has increasing or decreasing returns?
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over a single variable, it is nothing more than a claim about risk preferences. an optimizer over a linear function is indifferent btw $1 and $2 if a coin lands heads. you can fill in the other two cases.
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But the whole point is that actual choices do not take the form of picking a distribution of a single quantity. What you're syaing is that if we knew that utility existed and it was all people cared about, then it would make sense to represent their choices as maximizing utility.
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no. what i am saying the conventional framework says is that if we model agents as maximizing a function of single quantity, then the choice of second derivative amounts to a claim about risk. i am not saying it is best or right to model humans this way (i do think sometimes and
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OK I see what you are saying now. But I think in all the actually useful cases of this analysis you won't need utility, you will be able to talk directly about money.
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i’m all for developing new positive theories (and even more for acknowledging the importance of normative thinking to any realistically useful economics). talking about money as a thing observably preferred rather than a shadow of future consumption is a key insight that
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Replying to @interfluidity @JWMason1 and
conventional economics struggles to deny. but i don’t think that observation is inconsistent with the utility framework. as chris carroll put it re the savings behavior of the wealthy, it’s as if the rich place money directly in the utility function.
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I still fail to see the gain from talking about "people" (really various social actors -- the person acting as a capitalist is not the person acting as a parent, etc., even if they inhabit the same body) pursuing utility which is a function of money, vs just pursuing money.
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Replying to @JWMason1 @interfluidity and
I mean, you start from the assumption that there is this amorphous thing called "utility" which it will simplify our accounts of human behavior to treat them all as maximizing.
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Replying to @JWMason1 @interfluidity and
Then you notice that actual human behavior doesn't sem to be maximizing any observable quantity, so you just define utility tautologically as a notional quantity that is maximal at whatever outcome people chose.
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Probably the whole project of treating human society as if it were an engineering problem is quixotic - but then, what do you do instead?
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