Utility Theory Quotes

Understand the acute difference between the cost of something and the value of something.

Economists typically think that your happiness goes up as you get more money, but the more you have, the less each additional dollar matters. This means that you value money most in times when you have less income and more expenses.

Psychologists call this habituation, economists call it declining marginal utility, and the rest of us call it marriage.

The best practical advice then is: try to maximize your expected payoff, which is the sum of all payoffs multiplied by probabilities.

We next consider the rule that the investor does or should consider expected return a desirable thing and variance of return an undesirable thing.

The gain to the winner is always less than the loss to the loser.

In proportion therefore, as the repulsiveness of the work increases, the wage decreases.

Want and effective demand are not the same thing. If they were, the poorest nations would be the ones to display the most vigorous demand.

Value is not determined by those who set the price. Value is determined by those who choose to pay it.

Most people, even in simple risky situations, don't behave the way the theory of utility would have them behave.

We might as well reasonably dispute whether it is the upper or the under blade of a pair of scissors that cuts a piece of paper, as whether value is governed by demand or supply.

The income men derive from producing things of slight consequence is of great consequence. The production reflects the low marginal utility of the goods to society. The income reflects the high total utility of a livelihood to a person.

Utility then is not the measure of exchangeable value, although it is absolutely essential to it.

The key to good decision making is evaluating the available information - the data - and combining it with your own estimates of pluses and minuses. As an economist, I do this every day.

For 99 issues out of 100 we could say that at some price they are cheap enough to buy and at some price they would be so dear that they would be sold.

Fungible goods in economics can be extended and traded. So, half as much grain is half as much useful, but half a baby or half a computer is less useful than a whole baby or a whole computer, and we've been trying to make computers that work that way.