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cardinal utility


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A utility function that can be subjected to a positive affine transformation without altering the implied preference order. A positive affine transformation applied to the initial utility function U generates the transformed utility function U* = a + bU, where b > 0. The utility function U is cardinal if the functions U and U* represent the same set of underlying preferences. An example of cardinal utility is an expected utility function. See also interpersonal comparisons; ordinal utility.

Subjects: Economics.


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