and there is no established market for the selling of farm financial records.1 In such a case, the
market value is negligible and the value of the object is established from the sentimental value.2
Figure 2 shows the change in utility for an irreplaceable good comprised solely of sentimental
value. The farmer in possession of his/her records is initially at point A. The farmer will only
forfeit his/her records to move to point C if he/she is compensated C(W) for the sentimental
value.
U b (W)
Figure 2. The utility effects of an irreplaceable good with no market value
Von Neumann-Morganstern Utility Function
The graphical content of Figure 2 can also be expressed through equations following the
insurance example by Cook and Graham (1972). The individual preference of the farmer is
expressed through the von Neumann-Morganstern utility function:
1 We assume that these farm financial records have no value for identity fraud.
2 The term sentimental value is somewhat a misnomer in the case of financial records, and a term such as
information value or personal value might be more appropriate. Sentimental value is used in accordance with the
terminology cited in other economic literature.