The hierarchy of subjective values directing Crusoe's actions at any point in time is called his value scale or utility scale. Crusoe's value scale is based on his personal goals and may be represented by a diagram like the one at right, showing the relative utilities of his three most highly ranked available alternatives for action before the final stage of production of his tree house. His highest preference is to complete the tree house, thus obtaining protection from the tiger and the elements. This alternative, however, deprives him of time and energy that he could spend hunting; moreover, it precludes using the bamboo poles, treetop, and thatch for other purposes. These latter benefits would be available if he chose the second alternative—i. e., hunting for food. Crusoe maximizes his position on his value scale by choosing the first alternative. The cost of that decision consists in precisely those benefits that the second-best alternative would have provided him.

Crusoe

complete tree house

hunt for food

munch on coconuts

Each of Crusoe's actions is a kind of unilateral exchange—that is, an exchange involving only one party. In each action, he relinquishes one set of opportunities (the cost of the action) for a perceived higher benefit.

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