Maximization of Utility and the Objective Function

Abstract

In this chapter the objective function, i.e., the function to be maximized for the optimization of distribution, will be studied. As pointed out above, the objective function is a social welfare function. Social welfare function is not unique, and there have been proposed a number of social welfare functions. The crucial questions are how we shall choose an appropriate or the most appropriate social welfare function, and what the justification for this choice is. Since a social welfare function is constructed from utility functions, I shall discuss utility and utility function again. The concept of utility leads to that of a general utility function, and in turn to that of interpersonal comparisons of utility. Only when interpersonal comparisons of utility are justified are we entitled to consider the construction of a social welfare function by using individual personal utility functions as components.