- Multiattribute Utility Theory without Expected Utility Foundations
- Medical Decision Making
- Volume | Issue number
- 15 | 15
- Pages (from-to)
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
Methods for determining the form of utilities are needed for the implementation of utility theory in specific decisions. An important step forward was achieved when utility theorists characterized useful parametric families of utilities, and simplifying decompositions of multiattribute utilities. The standard development of these results is based on expected utility theory which is now known to be descriptively invalid. The empirical violations of expected utility impair the credibility of utility assessments. This paper shows, however, that parametric and multiattribute utility results are robust against the major violations of expected utility. They retain their validity under non-expected utility theories that have been developed to account for actual choice behavior. To be precise, characterizations of parametric and multiattribute representations are extended to rank dependent utility, state dependent utility, Choquet expected utility, and prospect theory. Added after publication: Our Theorems 1 and 2 were essentially already given as Theorems 4 and 3, respectively, in Udo Ebert (1988), "Measurement of Inequality: An Attempt at Unification and Generalization," Social Choice and Welfare 5, 147-169. We discovered this only after publication.
- go to publisher's site
If you believe that digital publication of certain material infringes any of your rights or (privacy) interests, please let the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the material inaccessible and/or remove it from the website. Please Ask the Library, or send a letter to: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. You will be contacted as soon as possible.