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Cardinal vs Ordinal Utility Analysis - Coggle Diagram

- - - - • Utility can’t be quantified exactly (subjective; impractical).
    - - • Can’t compare across individuals (personal feelings differ).
    - - • Assumes constant MU of money (ignores wealth differences).
    - - • Quantity-focused; overlooks quality/psychology.
    - - • No dynamic preferences or market changes.
    - - • Impractical for real decisions.
- - - - • 1930s: Pareto, Hicks, Allen.
    - - • Ranking only (no numbers needed).
    - - • Overcomes Measurement
        
        • Realistic; easy preference ordering.
      - • Indifference Curves
        
        • Scientific consumer behavior explanation.
      - • No Interpersonal Comparisons
        
        • Individual-focused; aids welfare economics.
      - • Flexible & Empirical
        
        • Testable (revealed preference).
    - - • Fixes cardinal flaws; standard in modern microeconomics.