Risk Sharing and Group Decision Making

Jehoshua Eliashberg and Robert L. Winkler
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Jehoshua Eliashberg: Northwestern University
Robert L. Winkler: Indiana University and INSEAD

Management Science, 1981, vol. 27, issue 11, 1221-1235

Abstract: In a decision-making problem where a group will receive an uncertain payoff which must be divided among the members of the group, the ultimate payoff of interest is the vector of individual payoffs received by the members of the group. In this paper, preferences are quantified in terms of cardinal utility functions for such vectors of payoffs. These utility functions can represent preferences concerning "equitable" and "inequitable" vectors of payoffs as well as attitudes toward risk. The individual utility functions are aggregated to form a group utility function for the vector of payoffs, and this latter function is, in turn, used to generate a group utility function for the overall group payoff and a sharing rule for dividing the group payoff into individual payoffs. The resulting group decisions are Pareto optimal in utility space. Properties of the sharing rule and the group utility function are investigated for additive and multilinear group utility functions.

Keywords: group decision making; risk sharing; multiattribute utility (search for similar items in EconPapers)
Date: 1981
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Citations: View citations in EconPapers (13)

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