Functional Analytic Tools for Expected Utility Theory

Choosing solutions under risk and uncertainty requires the consideration of several factors. One of the main factors in choosing a solution is modeling the decision maker’s attitude to risk. The expected utility theory was the first approach that allowed to correctly model various nuances of the attitude to risk. Further research in this area has led to the emergence of even more effective approaches to solving this problem. Currently, the most developed theory of choice with respect to decisions under risk conditions is the cumulative prospect theory. This paper presents the development history of various extensions of the original expected utility theory, and the analysis of the main properties of the cumulative prospect theory. The main result of this work is a fuzzy version of the prospect theory, which allows handling fuzzy values of the decisions (prospects). The paper presents the theoretical foundations of the proposed version, an illustrative practical example, and conclusions based on the results obtained.

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Norm-Endorsement Utilitarianism and the Nature of Utility

Economics and Philosophy ◽

10.1017/s0266267100004144 ◽

1996 ◽

Vol 12 (2) ◽

pp. 165-182 ◽

Cited By ~ 15

Author(s):

Jonathan Baron

Keyword(s):

Expected Utility ◽

Utility Theory ◽

Expected Utility Theory ◽

Interpersonal Comparison ◽

Moral Norms ◽

Moral Principles ◽

Future Goals ◽

Equal Consideration

In this article, I shall suggest an approach to the justification of normative moral principles which leads, I think, to utilitarianism. The approach is based on asking what moral norms we would each endorse if we had no prior moral commitments. I argue that we would endorse norms that lead to the satisfaction of all our nonmoral values or goals. The same approach leads to a view of utility as consisting of those goals that we would want satisfied. In the second half of the article, I examine the implication of this view for several issues about the nature of utility, such as the use of past and future goals. The argument for utilitarianism is not completed here. The rest of it requires a defense of expected-utility theory, of interpersonal comparison, and of equal consideration (see Baron, 1993; Broome, 1991).

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Housing Market Search Behavior and Expected Utility Theory: 1. Measuring Preferences for Housing

Environment and Planning A Economy and Space ◽

10.1068/a140681 ◽

1982 ◽

Vol 14 (5) ◽

pp. 681-698 ◽

Cited By ~ 31

Author(s):

T R Smith ◽

W A V Clark

Keyword(s):

Los Angeles ◽

Housing Market ◽

Expected Utility ◽

Utility Theory ◽

House Price ◽

Expected Utility Theory ◽

Utility Functions ◽

Future Search ◽

Space Construction ◽

Market Search

This is the first of two papers examining housing market search in a Los Angeles market. In this paper, we derive and analyze utility functions for housing for each individual in two groups of subjects. The utility functions are derived from an experimental setting, in which house price, floor space, construction quality, and neighborhood quality are varied. The functions are found to be essentially compatible with a linear model. They are used to predict the ratings of real houses and the ratings of the expected value of future search. These ratings are compared with actual ratings obtained from subjects during search. The results suggest that the actual or predicted ratings may be employed in a direct test of a simple expected utility theory of search, and further research along these lines appears justified.

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