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First, this paper introduces and axiomatizes range-dependent utility as a new conceptual framework for decision making under risk. It is a simple and well-defined generalization of expected utility theory in which utility depends on the range of lottery outcomes. Second, a special case of this framework is proposed for prediction. It is based on applying a single utility function (decision utility) to every normalized lottery range. The resultant decision utility model predicts well-known expected utility paradoxes without recourse to probability weighting. Necessary and sufficient conditions for the model to satisfy monotonicity with respect to first-order stochastic dominance are identified. The typical decision utility function, which is confirmed by both experimental data and normative considerations, is S shaped. History: Accepted by Manel Baucells, decision analysis. Funding: The first author acknowledges financial support by the Narodowe Centrum Nauki (National Science Center, Poland) [Grant KAE/NCN/2012/07/N/HD4/00272]. Keywords: range-frequency model * expected utility * certainty equivalent * Allais paradox * probability weighting * Stochastic dominance violations, 1. Introduction Many restaurants use extremely expensive dishes as decoys. One probably will not buy such a dish but will perceive other dishes a little cheaper by comparison. This example [...]

We revisit Machina's local utility as a tool to analyze attitudes to multivariate risks. We show that for nonexpected utility maximizers choosing between multivariate prospects, aversion to multivariate mean preserving [...]

Insurance as a financial instrument has been used for a long time. The dramatic increase in competition within the insurance sector (in terms of providers coupled with awareness for the need for insurance) has concomitantly resulted in more policy options being available in the market. The insurance seller needs to know the buyer's preference for an insurance product accurately. Based on such multi-criterion decision-making, we use a logarithmic goal programming method to develop a linear utility model. The model is then used to develop a ready reckoner for policies that will aid investors in comparing them across various attributes. Journal of the Operational Research Society (2010) 61, 585-593. doi: 10.1057/jors.2009.26 Published online 25 March 2009 Keywords: finance; mathematical programming; utility theory

Content adaptation is an important issue of multimedia frameworks in order to achieve universal multimedia access (UMA), i.e., to enable consumption of multimedia content independently of the given resource limitations, terminal capabilities, and user preferences. The digital item adaptation (DIA) standard, one of the core specifications of the MPEG-21 framework, supports content adaptation considering a wide range of networks, devices, and user preferences. Most adaptive multimedia frameworks targeting the UMA vision do not consider utility aspects in their adaptation decisions. This paper focuses on a generic semantic-based audio--visual utility model for DIA that aims to enhance the multimedia experience for the user. Our proposed model is able to take the semantics and the perceptual features of the content as well as the users' specific utility aspects into account. Based on a detailed analysis of these constraints, we will show how the model reacts on individual input data. For choosing the best adaptation decision considering resource limitations on client and server sides as well as network characteristics, we evaluate four algorithms for performing this adaptation decision taking task. We will discuss results according to some use case scenarios. Index Terms--Adaptation decision taking, optimization problem, recommender system, semantic quality (SQ), universal multimedia access (UMA), universal multimedia experience (UME), utility model.

The application of the utility theory for the multi-objective optimization of evolutionary computations, to schedule the preventive maintenance of aircraft, is described.

Application of utility theory to determine value of time for creating multiclass multicriteria equilibrium for transportation of goods is described.

A Mexican case study on control of goods transport flow by induction of route choice, using utility theory, is presented.

A study on forecasting of transport demand and travel behavior of trip chain's transport system users, using utility theory, is analyzed.

A study uses utility theory to examine the newsvendor problem. Several utility function parameters are considered in the study.

An approach to study the economic problems on the basis of a utility function, using recursive economic models is described. The model is used to modify the dynamic programming with Recursive utility and optimal growth, allowing for both bounded and unbounded returns.

The study conducted presents that for a general class of preferences, a separation of a key component of tastes, the utility function, from the other components of the representation is possible only if the decision maker's preference satisfy a mild but not completely innocuous conditions, called 'certainty independence'. The study outlines the axiomatic characterization of the preferences that obtain such separation, which are a subset of the biseperable preferences.

Extension of the concept of multi-attribute auctions to allow for configurable offers along with its usefulness for suppliers in specifying the bids is focused. The analysis of the winner determination problems occurring in case of multiple sourcing is also discussed.

A methodology for building a non-additive utility function to represent both the positive and negative interactions between criteria as expressed by the Decision Maker's utility function is proposed. However, as the number of parameters and reference alternatives increase, alternative methodologies can be employed for better results.

A model for portfolio optimization extending the classical Markowitz mean-variance model is projected. A hierarchy of objectives is formulated, which decomposes risk and return into five sub-objectives allowing individual investors preferences to be taken into account.

The magnitudes of relative prudence and relative risk aversion are characterized in terms of the mean-standard, two-parameter approach, which is compared and contrasted with the expected-utility approach.

The comparative statics of optimal decisions under uncertainty when preferences are represented by two moments, mean-variance utility functions are analyzed. Stronger concepts are needed to determine comparative static effects of changes in background risks.

The article examines a new form of utility function that has parameters dependent on initial wealth, unlike conventional utility functions that rely on definitions of final wealth. Discussion includes exponential and quadratic utility functions with robust risky assets and decreasing risk aversion.

Risk attitudes may depend on time preferences and emotional reactions to wealth.

The effects of the empirical performance of two brand choice models - probabilistic and random utility of state dependence are evaluated in accurately tracking and predicting brand choices.

Empirical results of utility theory, which is used to examine solutions to road-use pricing, are presented.

The problem of representing an incomplete preference relation by means of a vector valued utility function is evaluated. The results extrapolate classical utility representation theorems of the theory of individual choice and provide mode to develop a consumer theory, which realistically allows individuals to exhibits some indecisiveness on occasion.

Simulation techniques for high dimensional sensitivity analysis of the weights of multi-criteria decision models are studied. The simulation approach allows concurrent changes of the weights and yields results that can be easily studied statistically to help in understanding multi-criteria model proposals. The simulation techniques that were used can be employed in actual decision processes.

An extended version of the optimum maintenance-strategy decision-model for 2-unit standby systems introduces a Gamma repair-time distribution with shape-parameter 2, and tackles the conflicting needs of system availability and cost through maximization of a multi-attribute utility function. The unit failure and repair rates are assumed to be constant, and a Bayes approach models the uncertainty of the Gamma scale-parameter. A numerical application with sensitivity analysis, demonstrates the usefulness of the model. The optimum solution is assumed to occur at the maximum mean utility.

Subjective probability in the purchase decisionmaking of consumers can be compatible with the existence of risk choices which are not necessarily linked to utility preference risks. Bayesian rationality is applied to hybrid subjective/objective uncertainty situations, such as roulette lotteries. The role of beliefs is a component in modeling subjective choice.

The principles and implications necessary for the evaluation of medical interventions in the application of cost-effectiveness (CE) analysis has been studied using a standard von Neumann-Morgenstern utility framework. Results showed that CE analysis, within the von Neumann-Morgenstern utility framework, can be used in resource allocation decisions and in choosing health interventions. However, comparison of CE to a particular intervention gives little help in resource allocation decisions.

Methods of utility theory, which are used to examine the impact of direct-to-consumer advertising of drugs on stakeholders' relations, are presented.

A host of experiments have examined theories of risky choice using individuals. However, many important economic decisions are taken within multi-adult households. This paper reports on the first economic experiment designed to test theories of household choice. We use established couples and face them individually and jointly with decisions involving monetary payoffs. We find that joint choices typically are more risk averse than those made by individuals. Meanwhile, choices made by couples exhibit the same kinds of departures from expected utility theory (e.g. the common ratio and common consequence effects) as are regularly recorded with individuals.

How much information should a policy maker pass on to an ill-informed citizen? In this paper, we address this classic question of in a setting in which beliefs impact utility, as in . We show that this question cannot be answered using a utility function with standard revealed preference foundations. To solve the model, we go beyond the classical model in two respects, relying on the psychological expected utility model of to capture preferences, and the psychological game model of to capture strategic interactions.

Exponential and power utility functions are used to measure option price-implied risk aversion for various horizons; findings are consistent across markets and utility functions. Relative risk aversion is lower during volatility, and declines with the forecast horizon.

Selecting a procurement strategy for construction projects is inherently subjective. The decision is often intuitively based on the previous experience and knowledge of the decision maker. An objective-subjective procurement selection method is proposed. The method takes into account the need to have an objective base for strategy comparison through the use of multiattribute utility technology. Allowing the decision maker to assign importance ratings for the selection criteria also accommodates individual preferences and project specificities. The analytical hierarchical process based importance ratings assignment method improves both the objectivity and the reliability of the assessment. Applications in real cases suggest positive potential use of the method.

A further sufficient condition on two-moment decision models and utility-respresentable preferences is described, which is centered on partial relative risk aversion introduced by Menezes and Hanson (1970) in the expected utility framework.

Research is presented concerning the determination of the consistency of a model which has been developed to analyze multiperson decision-making problems. The multiplicative preference model is discussed.