<p>In many microeconomic models, we read the assumption that agents have <a href="https://en.wikipedia.org/wiki/Risk_aversion#Absolute_risk_aversion" rel="nofollow noreferrer">CARA</a> normal utility preferences. We need the assumption of the utility to do pricing, but should someone do differently?</p>

<p>Namely, is there a case where we do not need utility functions to make pricing? I think this has to do with the probability measure, if it is unique or not.</p>

<microeconomics><mathematical-economics>
Why do we need the specific utility assumption?
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# Why do we need the specific utility assumption?

(Asked by: username_0 on 2020-06-12)

In many microeconomic models, we read the assumption that agents have [CARA](https://en.wikipedia.org/wiki/Risk_aversion#Absolute_risk_aversion) normal utility preferences. We need the assumption of the utility to do pricing, but should someone do differently?

Namely, is there a case where we do not need utility functions to make pricing? I think this has to do with the probability measure, if it is unique or not.

**Tags:** microeconomics, mathematical-economics


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## 0 answers

