Definition in Terms of Preferences
Quasilinearity can also be defined as a property of preferences directly; is quasilinear if (1) if then, where and is a real number. The two definitions are equivalent in the case of a convex consumption set with continuous preferences that are locally non-satiated in the first argument.
Informally, an agent has quasilinear utility if it can express all its preferences in terms of money and the amount of money it has will not create a wealth effect. As a practical matter in mechanism design, quasilinear utility ensures that agents can compensate each other with side payments. In regards to surplus, quasilinear preferences entail that Marshallian surplus will equal Hicksian surplus since there would be no wealth effect for a change in price.
Read more about this topic: Quasilinear Utility
Famous quotes containing the words definition in, definition, terms and/or preferences:
“Was man made stupid to see his own stupidity?
Is God by definition indifferent, beyond us all?
Is the eternal truth man’s fighting soul
Wherein the Beast ravens in its own avidity?”
—Richard Eberhart (b. 1904)
“According to our social pyramid, all men who feel displaced racially, culturally, and/or because of economic hardships will turn on those whom they feel they can order and humiliate, usually women, children, and animals—just as they have been ordered and humiliated by those privileged few who are in power. However, this definition does not explain why there are privileged men who behave this way toward women.”
—Ana Castillo (b. 1953)
“An evident principle ... is the principle of justice to all peoples and nationalities, and their right to live on equal terms of liberty and safety with one another, whether they be strong or weak.”
—Woodrow Wilson (1856–1924)
“This is the great truth life has to teach us ... that gratification of our individual desires and expression of our personal preferences without consideration for their effect upon others brings in the end nothing but ruin and devastation.”
—Hortense Odlum (1892–?)