Browsing by Subject "Utility representation"

Now showing 1 - 1 of 1
  • Thumbnail Image
    Item
    Definable Utility in O-Minimal Structures
    (Center for Economic Research, Department of Economics, University of Minnesota, 1996-12) Richter, Marcel K.; Wong, Kam-Chau
    Representing binary ordering relations by numerical functions is a basic problem of the theory of measurement. It has applications in many fields of science, and arises in psychology and economics as the problem of establishing utility functions for preference relations. We obtain definable utility representations for (both continuous and upper semicontinuous) definable preferences in o-minimal expansions of real closed ordered fields. Such preferences have particular significance for modeling "bounded rationality" [18]. Our proofs are based on geometric theorems for definable sets, and provide new alternatives to the classical tools of separability (Debreu [5], Rader [16]) and metric-completeness (Arrow and Hahn [1]). The initial application of these ideas in economics was made by Blume and Zame (1992). Our results extend their Theorem 1 in several directions (see Remark la below).