Franciy Shoo
Dec 14, 2023
What are the difference between ordinal theory and Cardinal theory ?
1 view
1 view
1 answer
Sort By
ChatGPT
Dec 14, 2023
Ordinal theory and cardinal theory are two different approaches to measuring and comparing preferences or utility in economics and decision theory. Here are the main differences between the two:
1. Measurement: Cardinal theory assigns numerical values to preferences or utility, allowing for precise measurement and comparison. On the other hand, ordinal theory only ranks preferences or utility in terms of their relative order, without assigning specific numerical values.
2. Interpersonal Comparison: Cardinal theory allows for interpersonal comparison of utility or preferences, meaning that it is possible to compare the utility or preferences of different individuals. In contrast, ordinal theory does not allow for interpersonal comparison, as it only focuses on the relative order of preferences.
3. Assumptions: Cardinal theory assumes that individuals have complete and transitive preferences, meaning that they can compare and rank all possible alternatives consistently. Ordinal theory, on the other hand, only assumes that individuals can rank alternatives, without requiring complete and transitive preferences.
4. Mathematical Operations: Cardinal theory allows for mathematical operations such as addition, subtraction, and multiplication on utility or preference values. This enables the calculation of aggregate utility or the comparison of changes in utility. In contrast, ordinal theory does not allow for such mathematical operations, as it only focuses on the relative order of preferences.
5. Subjectivity: Cardinal theory is often criticized for its subjective nature, as it requires individuals to assign numerical values to their preferences or utility. Ordinal theory, on the other hand, is considered to be more objective, as it only requires individuals to rank their preferences without assigning specific numerical values.
Overall, cardinal theory provides a more precise and measurable approach to comparing preferences or utility, while ordinal theory focuses on the relative order of preferences without assigning specific numerical values.
1. Measurement: Cardinal theory assigns numerical values to preferences or utility, allowing for precise measurement and comparison. On the other hand, ordinal theory only ranks preferences or utility in terms of their relative order, without assigning specific numerical values.
2. Interpersonal Comparison: Cardinal theory allows for interpersonal comparison of utility or preferences, meaning that it is possible to compare the utility or preferences of different individuals. In contrast, ordinal theory does not allow for interpersonal comparison, as it only focuses on the relative order of preferences.
3. Assumptions: Cardinal theory assumes that individuals have complete and transitive preferences, meaning that they can compare and rank all possible alternatives consistently. Ordinal theory, on the other hand, only assumes that individuals can rank alternatives, without requiring complete and transitive preferences.
4. Mathematical Operations: Cardinal theory allows for mathematical operations such as addition, subtraction, and multiplication on utility or preference values. This enables the calculation of aggregate utility or the comparison of changes in utility. In contrast, ordinal theory does not allow for such mathematical operations, as it only focuses on the relative order of preferences.
5. Subjectivity: Cardinal theory is often criticized for its subjective nature, as it requires individuals to assign numerical values to their preferences or utility. Ordinal theory, on the other hand, is considered to be more objective, as it only requires individuals to rank their preferences without assigning specific numerical values.
Overall, cardinal theory provides a more precise and measurable approach to comparing preferences or utility, while ordinal theory focuses on the relative order of preferences without assigning specific numerical values.
0
