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.

References

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

Chambers, R.G. and Färe, R. (1998) Translation homotheticity, Economic Theory, 11, pp. 629-641.

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.

Downloads

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

License

The works published in this journal are subject to the following terms:

1. Oviedo University Press (the publisher) retains the property rights (copyright) of published works, and encourages and enables the reuse of the same under the license specified in paragraph 2.

© Ediuno. Ediciones de la Universidad de Oviedo / Oviedo University Press

2. The works are published in the online edition of the journal under a Creative Commons Attribution-Non Commercial-Non Derives 3.0 Spain (legal text). You can copy, use, distribute, transmit and publicly display, provided that: i) you cite the author and the original source of publication (journal, publisher and URL of the work), ii) they are not used for commercial purposes, iii) mentions the existence and specifications of this license.

3. Conditions of self-archiving. The author can archive the post-print version of the article (publisher’s version) on the author’s personal website and/or on the web of  the institution where he belong, including a link to the page of the journal and putting the way of citation of the work. Economics and Business Letters and its URL https://reunido.uniovi.es/index.php/EBL/index are the only authorized source for correctly giving the reference of the publisher’s version in every mention of the article.