- noun the convex shape of a curve. The theory is that if points in a set are connected and the line between any two points is included in the set, then the set is convex. In economics, this corresponds to diminishing marginal utility. In finance it can represent a convex curve in price yield of a bond.
(written as Convexity)More specifically, in economics this is one of the axioms of utility theory. It stipulates that indifference curves are convex (= concave 'upward').