GIGAMIND

Folder:
126 Decision Making
File:
126.005 Decision Making - Utility

Utility

Utility == usefulness/worth/value/happiness

"Utility units" is an arbitrary number that can be used as a relative measurement against other options.

Total utility = the total amount of utility units you accrue as you add more units of whatever you're measuring. E.g. Ice cream - 1 scoop = 80 t/u, 2 scoops = 140 t/u (you get more utility out of two scoops than one scoop)

Marginal utility = the difference between units of whatever you're measuring. E.g in the ice cream example you got a marginal utility of 80 units going from zero to one, and a marginal utility of 60 going from one to two scoops.


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Tags:
  • decision-making
  • statistics
  • economics