How can utilities not be comparable in terms of multiplication?
“The utility of A is twice the utility of B” is not a statement that remains true if we add the same constant to both utilities, so it’s not an obviously meaningful statement. We can make the ratio come out however we want by performing an overall shift of the utility function. The fact that we think of utilities as cardinal numbers doesn’t mean we assign any meaning to ratios of utilities. But it seemed that you were trying to say that a person with a logarithmic utility function assesses $10^9 as having twice the utility of $50k.
The fact that we think of utilities as cardinal numbers doesn’t mean we assign any meaning to ratios of utilities.
Kindly says the ratios do have relevance to considering bets or risks.
But it seemed that you were trying to say that a person with a logarithmic utility function assesses $10^9 as having twice the utility of $50k.
Yes, I think I see my error now, but I think the force of the numbers is clear: log utility in money may be more extreme than most people would intuitively expect.
“The utility of A is twice the utility of B” is not a statement that remains true if we add the same constant to both utilities, so it’s not an obviously meaningful statement. We can make the ratio come out however we want by performing an overall shift of the utility function. The fact that we think of utilities as cardinal numbers doesn’t mean we assign any meaning to ratios of utilities. But it seemed that you were trying to say that a person with a logarithmic utility function assesses $10^9 as having twice the utility of $50k.
Kindly says the ratios do have relevance to considering bets or risks.
Yes, I think I see my error now, but I think the force of the numbers is clear: log utility in money may be more extreme than most people would intuitively expect.