Utility Theory California State University, Fresno效用理论加利福尼亚州立大学弗雷斯诺.pptVIP

Utility Theory Presented by: Tiffani Ann Martin Enrique Tarango Ryan Mae Bejarano Sean Williamson Economics 101 Dr. Sasan Fayazmanesh Fall 2002 Roots of Utility Theory Neoclassical Definition of Utility: “The pleasure or satisfaction obtained from a good or service.” The Micro Economy Today, Schiller, p. 108. Neoclassical definition encompasses the essence of Utilitarianism, founded by Jeremy Bentham. Differences between the neoclassical definition and the definition provided by Bentham mainly deal with the utility of the individual (neoclassical) versus aggregate utility (Bentham). Another major difference was the concept of “marginal” as it applied to utility: Neoclassicals used the marginal concept heavily in their theory and arguments, whereas Bentham did not, he was more of a utilitarian. Jeremy Bentham Born into a wealthy, Tory (British) family Studied law at Westminster School and Queen’s College, Oxford Bentham was known as a British gentleman, political activist, legal scholar, social philosopher, linguist, and contemporary of Adam Smith. Welcomed both the American and French Revolutions: He was made an honorary citizen of the French Republic in 1792. Known as the father of Utilitarianism Bentham’s Approach  Refuted Smith’s principle of utility which rests on self-interest and natural identity to improve one’s position via individual attempts to acquire benefits and avoid costs. While Bentham agreed that individuals are self-interested he “denied any natural harmony of egoisms.” Bentham reasoned that crime, for example, is a self-motivated behavior that violates public interest, and therefore, provides proof that a state of natural harmony did not exist. He asserted that statesmen must seek an “artificial harmony” of interests through proper legislation. A History of Economic Theory and Method (p. 126) An Introduction to the Principles of Morals and Legislation 1781 Bentham’s m