A Cognitive Basis for Cardinal Utility
نویسنده
چکیده
This paper suggests a cognitive basis for the isomorphism of a utility function and a distribution function. With only a minimal set of cognitive tools ordinal comparison and frequency processing an object can be evaluated by its relative position in a reference set. This cognitive evaluation, coupled with “more is better” preferences, is consistent with possession of a cardinal utility function, which is determined by one’s environment, and thus adapts to changes in the environment. The effects of cognitive imperfections are considered. The model provides a framework which may accommodate a number of developments both in psychology and economics. Journal of Economic Literature classification numbers: D11, D62
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