Most mainstay economics equilibrium models have got utility represatations which involve the Constant Relative Risk Aversion attributes which involves a con-curve utility curve among other things. The CRRA formula is as follows:
Where u(c) is utility from consumption and "c" is consumption.By addition of a Stochastic Discount Factor (SDF) rho the above equation can be adjusted to represent future utilities which are being considered by the rational individual. the eventual equation is as follows:
In generating various macroeconomic equilibria, the utility is assumed to be constant as represented by the above equations but this isn't the case in reality. Although various theories have emerged in the field of Behavioral Economics such as Prospect Theory these haven't been incorporated into macro-econometrics because the utility theories descendant from the Expected Utility Theorem (EUT) such as the CRRA are easier to deal with mathematically but this is misleading. Literature hasn't made exhaustive attempts to correct this but hey that's the job for new and future researchers like myself. If such an attempt is successful, surely this would be the next big thing in Economics
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