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Strength of Preference and Risky Choice

Author

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  • Rakesh Kumar Sarin

    (University of California at Los Angeles, Los Angeles, California)

Abstract

This paper provides conditions under which a utility function under risk can be legitimately interpreted to measure strength of preference between consequences. These conditions require that if a decision maker regards the preference difference between acts a and b to be the same as the preference difference between acts a ′ and b ′ for every state of the world, then the preference difference between a and b should be regarded as equivalent to the preference difference between a ′ and b ′. A key assumption is that a decision maker's preference differences between acts given one state of the world should be independent of common consequences given other states of the world. Usefulness of this result is discussed.

Suggested Citation

  • Rakesh Kumar Sarin, 1982. "Strength of Preference and Risky Choice," Operations Research, INFORMS, vol. 30(5), pages 982-997, October.
    • Handle: RePEc:inm:oropre:v:30:y:1982:i:5:p:982-997
    DOI: 10.1287/opre.30.5.982
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    Cited by:

    1. Melissa Garber & Shahram Sarkani & Thomas Mazzuchi, 2017. "A Framework for Multiobjective Decision Management with Diverse Stakeholders," Systems Engineering, John Wiley & Sons, vol. 20(4), pages 335-356, July.
    2. Han Bleichrodt & Magnus Johannesson, 1997. "An Experimental Test of a Theoretical Foundation for Rating-scale Valuations," Medical Decision Making, , vol. 17(2), pages 208-216, April.
    3. Denis Bouyssou & Jean-Claude Vansnick, 1990. "« Utilité cardinale » dans le certain et choix dans le risque," Revue Économique, Programme National Persée, vol. 41(6), pages 979-1000.
    4. Nakamura, Yutaka, 2015. "State-dependent strength-of-preference," Mathematical Social Sciences, Elsevier, vol. 78(C), pages 64-68.
    5. Kangas, Annika S. & Kangas, Jyrki, 2004. "Probability, possibility and evidence: approaches to consider risk and uncertainty in forestry decision analysis," Forest Policy and Economics, Elsevier, vol. 6(2), pages 169-188, March.
    6. Baucells, Manel & Shapley, Lloyd S., 2008. "Multiperson utility," Games and Economic Behavior, Elsevier, vol. 62(2), pages 329-347, March.
    7. George Wu, 1999. "Anxiety and Decision Making with Delayed Resolution of Uncertainty," Theory and Decision, Springer, vol. 46(2), pages 159-199, April.
    8. Philippe Delquié, 2008. "The Value of Information and Intensity of Preference," Decision Analysis, INFORMS, vol. 5(3), pages 129-139, September.
    9. Rakesh K. Sarin, 2021. "Just society," Theory and Decision, Springer, vol. 91(4), pages 417-444, November.
    10. Schuwirth, N. & Reichert, P. & Lienert, J., 2012. "Methodological aspects of multi-criteria decision analysis for policy support: A case study on pharmaceutical removal from hospital wastewater," European Journal of Operational Research, Elsevier, vol. 220(2), pages 472-483.

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