My Math Forum  

Go Back   My Math Forum > Science Forums > Economics

Economics Economics Forum - Financial Mathematics, Econometrics, Operations Research, Mathematical Finance, Computational Finance

LinkBack Thread Tools Display Modes
January 2nd, 2017, 03:40 AM   #1
Joined: Apr 2013

Posts: 36
Thanks: 0

Utility on negative wealth

Hi all,

can anyone kindly explain the intuition/interpretation behind defining utility on negative wealth (such as exponential utility)?

Thank you!

Last edited by skipjack; January 2nd, 2017 at 03:55 AM.
natt010 is offline  
January 2nd, 2017, 07:46 AM   #2
Senior Member
Joined: May 2016
From: USA

Posts: 1,310
Thanks: 552

First, there is nothing that precludes the functions of economic theory from being defined piece-wise. It is usual in economics that interest is focused on a very small domain (the neighborhood of a point of intersection or of tangency for example) so that the nature of the function outside that restricted domain is irrelevant. Only the very best economists manage to remember consistently that the functions of economic theory are highly simplified idealizations.

Second, the opposite of wealth is debt. Just ask a few graduates about how warm and fuzzy they feel about student loan debt.
JeffM1 is offline  

  My Math Forum > Science Forums > Economics

negative, utility, wealth

Thread Tools
Display Modes

Similar Threads
Thread Thread Starter Forum Replies Last Post
Super-Rich Wealth Distribution BigDaddy Economics 0 September 14th, 2016 02:41 PM
discounted negative utility function natt010 Economics 0 November 26th, 2014 01:17 AM

Copyright © 2019 My Math Forum. All rights reserved.