Benefit function and individual preferences. A generalization of the zero-maximum principle

Authors

  • Juan Aparicio University Miguel Hernandez of Elche, Spain
  • Jesus T. Pastor University Miguel Hernandez of Elche, Spain

DOI:

https://doi.org/10.17811/ebl.1.1.2012.12-20

Abstract

In this paper we show that given a utility threshold Luenberger’s benefit function correctly represents individual preferences as long as specific reference commodity bundles are considered. We further show a condition which is sufficient for reaching Pareto optimality that generalizes the zero-maximum principle proposed by Luenberger. Under our hypothesis, the social benefit could be positive, negative or zero, and not necessarily always zero.

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References

Allais, M. (1943) A la Recherche d’une Discipline Economique, 3rd. Ed, (published as Traite d’Economie pure, Clement Juglar, 1994), Paris.

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Courtault, J.M., Crettez, B. and Hayek, N. (2007) A Note on Luenberger’s Zero-Maximum Principle for Core Allocations, International Game Theory Review, 9(3), 453-460.

Dierker, E. and Lenninghaus, J. (1986) Surplus maximization and pareto-optimality. In Hildenbrand, W. and Mas-Colell, A. (eds.): Contributions to Mathematical Economics, North Holland: Amsterdam, 143-166.

Edgeworth, F.Y. (1932) Mathematical Psychics, Reprint London School of Economics: London.

Luenberger, D.G. (1992a) Benefit functions and duality, Journal of Mathematical Economics, 21, 461-481.

Luenberger, D.G. (1992b) New optimality principles for economic efficiency and equilibrium, Journal of Optimization Theory and Applications, 75(2), 221-264.

Luenberger, D.G. (1995) Microeconomic Theory, McGraw Hill: Boston.

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Published

22-03-2012

How to Cite

Aparicio, J., & Pastor, J. T. (2012). Benefit function and individual preferences. A generalization of the zero-maximum principle. Economics and Business Letters, 1(1), 12–20. https://doi.org/10.17811/ebl.1.1.2012.12-20

Issue

Vol. 1 No. 1 (2012): March

Section

Articles

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