No. 10 · Decisions · Economics
Utility Values
Value lives in the person, not the object, so the same thing is worth different amounts to different people.
In the Almanac
“Tulip mania”, 1630s · “Dyson”, 1993–2009
Both stories in full, three ways to use it and where it misleads.
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Questions
What is Utility Values?
Utility value is the personal satisfaction or benefit someone gets from something, which is why two people can value the same item very differently. Tulip bulbs once meant status to some and mere flowers to others, and Dyson buyers pay a premium for design and story as well as suction.
How do you use Utility Values?
Before buying, ask how much genuine benefit something will bring you, not what others think or what it costs. Remember your values will change over time. In negotiations and gift-giving, find out what the other person truly values; differences in value open room for good trades.
When does Utility Values matter?
Utility Values is one of the 35 mental models for decisions, the situations where you ask: Which way should I go? Within that, it belongs to “Weighing the options”, alongside A/B Testing, Back-of-the-Envelope Calculation and Cost-Benefit Analysis.
What is an example of Utility Values?
Two stories show it at work: Tulip mania (1630s) and Dyson (1993–2009). Both are told in full in The Mental Models Daily Almanac, which has two stories for each of its 365 models.
Which mental models are related to Utility Values?
Law of Diminishing Marginal Utility, Bandwagon Effect and Best Alternative to a Negotiated Agreement. Utility Values itself comes from economics.