Home/Utility

Utility is a measure of preferences over some set of goods and services. The concept is a central underpinning of rational choice theory. Utility is an important concept in economics and game theory because it represents satisfaction experienced by the consumer of a good. A good is something that satisfies human wants. Since one cannot directly measure benefit, satisfaction or happiness from a good or service, economists instead have devised ways of representing and measuring utility in terms of economic choices that can be measured. Utility is revealed in people’s willingness to pay different amounts for different goods.

2016-10-14T22:50:00+00:00