The Utility Function

A utility function is a way to measure how much satisfaction or value a person gets from different choices or outcomes. It helps to understand preferences by assigning numerical scores to options, with higher scores indicating more preferred choices. For example, it can show how much someone prefers one type of food over another, or how they value money, leisure, or other goods. Economists use utility functions to analyze decision-making and predict behavior, assuming people aim to maximize their overall satisfaction when choosing among alternatives.