[EM] The history of utility theory, ideas, and flames
Warren Smith
wds at math.temple.edu
Tue Mar 13 19:48:30 PDT 2007
here is a quote plagiarized from an essay
The Emergence of Decision Analysis by Ralph F. Miles, Jr.:
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Decision theory continued to develop through economics in the 18th Century.
Jeremy Bentham, in his Principles of Morals and Legislation (1789),
first suggested that utility in terms of pleasure and pain could be measured.
He assumed the measurement to be made on what today would be a
called a cardinal scale (numerical scale unique up to a linear (affine) transformation),
so that he could make interpersonal comparisons and use arithmetic to aggregate individual
utilities into a social utility - the greatest good for the greatest number of individuals.
Initially utility in economics was measured on this cardinal scale.
Nevertheless, through the works of writers such as Edgeworth (1881) through
Hicks and Allen (1934), economics was purged of all requirements for cardinal scales.
They showed that the riskless economic theories of indifference curves required only
ordinal utilities (numerical scales unique up to positive montonic transformations).
Stigler (1950) gives a history of utility theory from 1776 until 1915.
See Fishburn (1982) for a unified treatment of his research in the foundations of
expected utility theory from 1965 to 1980.
In 1944, John von Neumann and O. Morgenstern published their first edition of
The Theory of Games and Economic Behavior. In their second edition (1947), they
included an appendix that gave an axiomatic treatment of utility.
[Here] cardinal utility reappeared to treat decision making under uncertainty.
This was followed by Marschaky in Statistical Decision Functions (1950)... [long list
of cites as Bayesianism becomes by far the most accepted school of statistics].
Bentham, J. (1789). An introduction to the principles of morals and legislation.
Reprinted in 1968 with notes in A. N. Page (ed.), Utility theory:
A book of readings (pp. 3-29). New York: John Wiley.
Edgeworth, F. Y. (1881). Mathematical psychics: An essay on the application of mathematics to
the moral sciences. London: Kegan Paul.
Fishburn, P. C. (1982). The foundations of expected utility. Dordrecht, the Netherlands:
D. Reidel.
Hicks, J. R., & Allen, R. G. D. (1934). A reconsideration of the theory of value.
Economica, 14, 52-76, 197-219.
Stigler, G. J. (1950). The development of utility theory. The Journal of Political Economy, 58,
307-327, 373-396.
Stigler, S. M. (1999). Statistics on the table: The history of statistical concepts and methods.
Cambridge, MA: Harvard University Press.
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It might be interesting to re-examine these works.
Warren D Smith
http://rangevoting.org
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