A testable form of the utility hypothesis results from identifying necessary condition(s) for the existence of a … utility function that rationalizes the price and quantity data, meaning a utility function that correctly predicts choices … that do not violate an agent's budget constraint. Possible inconsistencies with utility-maximizing choices are of no clear …

Using as a starting point a popular version of the utility function, we obtain a value for the risk aversion parameter … ratio. Moreover, we obtain a value for the utility of the market equilibrium portfolio …