Decomposing a Utility Function Based on Discrete Distribution Independence

Ying He, James Dyer, John Butler

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review


For two-attribute decision-making problems, the multilinear utility model cannot be applied when the risk aversion on one attribute depends on the level of the other attribute. We propose a family of general preference conditions called nth-degree discrete distribution independence that can accommodate a variety of dependence relationships between two attributes. The special case of second-degree discrete distribution independence is equivalent to the utility independence condition. We focus on third-degree discrete distribution independence that leads to a decomposition formula that contains many other preference models as special cases.
TidsskriftDecision Analysis
Udgave nummer4
Sider (fra-til)233-249
StatusUdgivet - dec. 2014


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