A note on utility-based pricing

Abstract

In this short note, we discuss the features of utility-based pricing and indifference pricing. To do this, we introduce a utility-based curve that simply and simultaneously allows for a discussion of the graphical features of both prices. We also clarify features of these prices form an economics point of view; the introduction of this utility-based curve enables us to simply discuss the property of the partial equilibrium of the random endowment. We also discuss the availability of the analysis using income and substitution effects to clarify the quality of economic goods. This analysis is well-known in the context of economics. A utility-based curve shows us the impossibility of this analysis. In a sense, the implicit purpose of this paper is to show the limitations of a utility-based and indifference framework.