Hidden Subjective Aspects in the Law of Diminishing Marginal Utility: The Initial Bump and Limitations of Neuroeconomics

Abstract

Laws have flaws and no law in sciences or humanities can be above the existence of exceptions and the
possibility of improvisations till perfection is attained since both rationalism and empiricism have severe
limitations. We take up the microscopics of the law of diminishing marginal utility to bring the hidden
subjectivity in several key aspects of its formulation. On the basis of an experiment with 118 persons, we
show for the first time that there is an initial bump in the marginal utility. We also comment on the limitations
of neuroeconomics to influence consumer choices indefinitely and explain the decision-making process as a
quantum measurement using psychophysical interpretation.