Generalized benefit functions and measurement of utility

Walter Briec () and Philippe Garderes
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Walter Briec: UPVD - Université de Perpignan Via Domitia

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Abstract: Luenberger [8] introduced the so-called benefit function that converts preferences into a numerical function that has some cardinal meaning. This measure has a number of remarkable properties and is a powerful tool in analyzing welfare issues ([10], [12], [13], [14]). This paper studies the conditions for a general function to make it a relevant welfare measure. Therefore, we introduce a large class of measures, called generalized benefit functions. The generalized benefit function is derived from the minimization of a convex function over the complement of a convex set. We show this class encompases as a special case the benefit function and is suitable to provide an alternative characterization of preferences. We also make a connection to the expenditure function through Fenchel duality theory and derive a duality result from Lemaire [7] for reverse convex optimization.

Date: 2004-09-01
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Published in Mathematical Methods of Operations Research, 2004, 60 (1), pp.101-123

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05623522

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