Re: Utility maximizing

[pdavidso@xxxxxxx (Paul Davidson)]

Charles wrote:
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>Mason:
>
>The principle of utility maximization is a method of explaining the
>rationality behind the process of consumer choice. The fact that you (or I)
>may disagree with a market outcome does not negate the fundamental logic
>behind this principle. Your argument is with the taste and preferences of
>certain consumers which YOU consider to be irrational (socially
>destructive) not with the guiding logic behind these decisions. I believe
>the validity of a theory is based on its ability to explain and predict
>economic behavior, that is, to help understand the "what-is" of economic
>behavior.  At this point, utility theory still predominates.


As everyone knows masochists are maximizing their utility and if they pair
us with a sadist they are truly engaging in utility maximization. The only
problem is that this example violates another basic neoclassical assumption
of utility maximization-- namely, the independence of utility functions!!

So tell me Charles what behavior does utility maximization help us explain??

Paul
Paul Davidson
Economics Department -- 523 SMC
University of Tennessee
Knoxville, Tennesseee 37996-0550
email: Pdavidson@xxxxxxx;   phone: (423)974-4221;    fax: (423) 974-1686