In economics and consumer theory, quasilinear utility functions are linear in one argument, generally the numeraire. Quasilinear preferences can be represented by the utility function where is strictly concave.[1]: 164 A useful property of the quasilinear utility function is that the Marshallian/Walrasian demand for does not depend on wealth and is thus not subject to a wealth effect;[1]: 165–166 The absence of a wealth effect simplifies analysis[1]: 222 and makes quasilinear utility functions a common choice for modelling. Furthermore, when utility is quasilinear, compensating variation (CV), equivalent variation (EV), and consumer surplus are algebraically equivalent.[1]: 163 In mechanism design, quasilinear utility ensures that agents can compensate each other with side payments.
