A Rehabilitation of the Law of Diminishing Marginal Utility: An Ordinal Marginal Utility Approach

Lin Chung-Cheng () and Peng Shi-Shu ()
Additional contact information
Lin Chung-Cheng: Institute of Economics, Academia Sinica, Taipei, 115, Taiwan, ROC
Peng Shi-Shu: Department of Public Finance, National Chengchi University, Taipei, 116, Taiwan

The B.E. Journal of Theoretical Economics, 2022, vol. 22, issue 2, 453-481

Abstract: The model in which an individual maximizes his ordinal or cardinal total utility has long been the paradigm of individual choice theory. However, the two mainstream utility theories, the ordinal and cardinal total utility theories, have caused a dilemma, i.e. one has to sacrifice one of the following two: the good property of utility ordinality, or common-sense notions such as the law of diminishing marginal utility. Ordinal theory keeps the former but gives up the latter, while cardinal theory keeps the latter but sacrifices the former. We propose an ordinal marginal utility approach aiming to solve this dilemma by changing the very first assumption regarding individual choice.

Keywords: ordinal utility; cardinal utility; ordinal marginal utility theory (search for similar items in EconPapers)
JEL-codes: D01 D11 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/bejte-2020-0158 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejtec:v:22:y:2022:i:2:p:453-481:n:3

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/bejte/html

DOI: 10.1515/bejte-2020-0158

Access Statistics for this article

The B.E. Journal of Theoretical Economics is currently edited by Burkhard C. Schipper

More articles in The B.E. Journal of Theoretical Economics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().