Multiattribute Utility Functions Satisfying Mutual Preferential Independence

Ali E. Abbas () and Zhengwei Sun ()
Additional contact information
Ali E. Abbas: Epstein Department of Industrial and Systems Engineering and Department of Public Policy, Viterbi School of Engineering, and Price School of Public Policy, University of Southern California, Los Angeles, California, 90089
Zhengwei Sun: Department of Management Science and Engineering, East China University of Science and Technology, Shanghai 200237, China

Operations Research, 2015, vol. 63, issue 2, 378-393

Abstract: The construction of a multiattribute utility function is an important step in decision analysis. One of the most widely used conditions for constructing the utility function is the assumption of mutual preferential independence where trade-offs among any subset of the attributes do not depend on the instantiations of the remaining attributes. Mutual preferential independence asserts that ordinal preferences can be represented by an additive function of the attributes. This paper derives the most general form of a multiattribute utility function that (i) exhibits mutual preferential independence and (ii) is strictly increasing with each argument at the maximum value of the complement attributes. We show that a multiattribute utility function satisfies these two conditions if and only if it is an Archimedean combination of univariate utility assessments. This result enables the construction of multiattribute utility functions that satisfy additive ordinal preferences using univariate utility assessments and a single generating function. We also provide a nonparametric approach for estimating the generating function of the Archimedean form by iteration.

Keywords: multiattribute utility; Archimedean utility copula; preferential independence (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://dx.doi.org/10.1287/opre.2015.1350 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:63:y:2015:i:2:p:378-393

Access Statistics for this article

More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().