Concept · Foundations

Diminishing Marginal Utility

The property that successive units of a good produce smaller and smaller increases in utility; the tenth dollar gained matters less to you than the first.

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Why it matters

Diminishing marginal utility is what makes concave utility functions and risk aversion rational rather than timid.

Where this shows up

Units and lessons using this concept

Following the links will take you to the page where this term is introduced in context.

Units (1)

Decision Theory: Choosing Under UncertaintyStudents learn the logic of rational decision making under risk and uncertainty, including expected value, utility, decision matrices, do…

Lessons (1)

Expected Value and Expected UtilityDecision Theory: Choosing Under Uncertainty

Other concepts in Foundations

A, E, I, O Propositions Accessibility Relation Argument Atomic Statement Base Rate Bayes Factor Calibration Cardinality Cartesian Product Categorical Proposition Categorical Syllogism Circularity