Additive utility

In economics, additive utility is a cardinal utility function with the sigma additivity property.^[1]^:287-288

Additive utility
$A$	$u(A)$
$\emptyset$	0
apple	5
hat	7
apple and hat	12

Additivity (also called linearity or modularity) means that "the whole is equal to the sum of its parts." That is, the utility of a set of items is the sum of the utilities of each item separately. Let $S$ be a finite set of items. A cardinal utility function $u:2^{S}\to \mathbb {R}$ , where $2^{S}$ is the power set of $S$ , is additive if for any $A,B\subseteq S$ ,

u(A)+u(B)=u(A\cup B)+u(A\cap B).

It follows that for any $A\subseteq S$ ,

u(A)=u(\emptyset )+\sum _{x\in A}{\big (}u(\{x\})-u(\emptyset ){\big )}.

An additive utility function is characteristic of independent goods. For example, an apple and a hat are considered independent: the utility a person receives from having an apple is the same whether or not he has a hat, and vice versa. A typical utility function for this case is given at the right.

Notes

As mentioned above, additivity is a property of cardinal utility functions. An analogous property of ordinal utility functions is weakly additive.
A utility function is additive if and only if it is both submodular and supermodular.

References

↑ Brandt, Felix; Conitzer, Vincent; Endriss, Ulle; Lang, Jérôme; Procaccia, Ariel D. (2016). Handbook of Computational Social Choice. Cambridge University Press. ISBN 9781107060432. (free online version)

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Additive utility

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References