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The nonconcavity of money-metric utility: A new formulation and proof

M. Ali Khan and Edward Schlee ()

Economics Letters, 2017, vol. 154, issue C, 10-12

Abstract: We offer a new, succinct proof of the fact that the money metric utility is concave for any preference relation representable by a concave function if and only if the indirect utility is affine in wealth. Our proof exploits the existence of a least concave representation established in Debreu (1976), and brings into salience the observation that the money-metric utility to be itself a least-concave representation of the preferences if it is concave. This observation is apparently new.

Keywords: Money metric; Expenditure function; Least-concave representation (search for similar items in EconPapers)
JEL-codes: D11 C61 D61 (search for similar items in EconPapers)
Date: 2017
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