Traditional utility theory, growing out of the ideas of von Neumann & Morgenstern and Savage, asserts that wise decision makers should maximize some form of expected utility. Decision analysis as a technology implements this prescription. But even after careful thought, people do not necessarily behave that way. The new generalized utility theories attempt to model what people actually do. This book grows out of a NSF-sponsored Conference that brought generalized utility theorists and decision analysts together to examine the normative, prescriptive, and descriptive implications of the new utility theories.
The book begins with a review of the phenomena that the new utility theories are intended to explain and of the theories themselves. It then presents the `old time religion' of utility maximization as a normative and prescriptive theory. It explores how utility maximization needs to be and can be amplified and supplemented for practical prescriptive purposes. The next section of the book looks at what characteristics generalized utility theories would need to have in order to be prescriptively useful. The crucial one turns out to be a form of path independence. Two chapters show that the form of path independence essentially forces the theory embodying it to be a version of traditional utility maximization. The next section of the book looks at the relation between gneralized utility theories and the data they are intended to explain. A final section contains an evaluative discussion that weaves the themes of the book together.
Utility Theories: Measurements and Applications provides a definitive answer to the question about the relation between new utility theories and decision analysis that inspired it. It also brings into focus a number of related questions, and reports a great deal of theoretical and empirical progress on the topics to which it is addressed.
I Review.- 1 Properties of Utility Theories and Related Empirical Phenomena.- II The Old Time Religion and Its Implementation.- 2 In Praise of the Old Time Religion.- 3 On the Foundations of Prescriptive Decision Analysis.- 4 Generic Analysis of Utility Models.- III Generalized Utility Is Not Normative.- 5 Small Worlds and Sure Things: Consequentialism by the Back Door.- 6 What Now for Generalized Utility Theory.- 7 The Independence Axiom Versus the Reduction Axiom: Must We Have Both?.- IV What Should Descriptive Decision Models Look Like? What Do They Describe?.- 8 Rational Versus Plausible Accounting Equivalences in Preference Judgments.- 9 Recent Tests of Generalizations of Expected Utility Theory.- 10 Toward the Demise of Economic Man and Woman; Bottom Lines from Santa Cruz.- V Discussion.- 11 Old and New Roles for Expected and Generalized Utility Theories.- Author Index.
Series: Studies in Risk and Uncertainty
Number Of Pages: 300
Published: 31st October 1992
Publisher: SPRINGER VERLAG GMBH
Country of Publication: US
Dimensions (cm): 23.62 x 16.05
Weight (kg): 0.47