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Ambiguity aversion has been widely observed in individuals’ judgments. Using scenarios that are typical in decision analysis, we investigate ambiguity aversion for pairs of individuals. We examine risky and cautious shifts from individuals’ original judgments to their judgments when they are paired up in dyads. In our experiment the participants were first asked to specify individually their willingness-to-pay for six monetary gambles. They were then paired at random into dyads, and were asked to specify their willingness-to-pay amount for the same gambles. The dyad’s willingness-to-pay amount was to be shared equally by the two individuals. Of the six gambles in our experiment, one involved no ambiguity and the remaining five involved ambiguity with different degrees of familiarity. We found that dyads exhibited both risk aversion as well as ambiguity aversion. Further, when facing ambiguity, dyads’ willingness-to-pay amounts are sometimes more and sometimes less than the average paid by the individuals making up the dyad. The majority of the dyads exhibited a cautious shift in the face of ambiguity, stating a smaller willingness-to-pay than the two individuals’ average. Our study thus confirms the persistence of ambiguity aversion in a group setting and the predominance of cautious shifts for dyads.

We consider a decision problem where a group of individuals evaluates multi-attribute alternatives. We explore the minimal required agreements that are sufficient to specify the group utility function. A surprising result is that, under some conditions, a bilateral agreement among pairs of individuals on a single attribute is sufficient to derive the multi-attribute group utility. The bilateral agreement between a pair of individuals could be on the weight of an attribute, on an attribute evaluation function, or on willingness to pay. We investigate cases in which each individual's utility function is either additive or multiplicative. In the additive case, the group utility can be represented as the weighted sum of group attribute weights and group attribute evaluation functions. In the multiplicative case, the group utility takes a more complex form.

For decisions whose consequences accrue over time, several techniques are possible to compute total utility. One is to discount utilities of future consequences at some appropriate rate. The second is to discount per-period certainty equivalents. And the third is to compute net present value of various possible streams and then apply utility function to these net present values. When consequences are income streams, our main result shows that for a strict concave utility function, discounting utilities of incomes or discounting per period certainty equivalents can result in a paradoxical preference for receiving more money later to more money now. For income streams, the correct approach is to …rst compute net present values of various possible income streams and then take the utility of such net present value. The discounted utility model is appropriate for consumption streams, provided that the time intervals between periods are sufficiently large. Otherwise, we have the unrealistic situation where a short delay in consumption produces a discontinuous jump in the utility evaluation.

We consider a decision problem where a group of individuals evaluates multiattribute alternatives. We explore the minimal required agreements that are sufficient to specify the group utility function. A surprising result is that, under some conditions, a bilateral agreement among pairs of individuals on a single attribute is sufficient to derive the multiattribute group utility. The bilateral agreement between a pair of individuals could be on the weight of an attribute, on an attribute evaluation function, or on willingness to pay. We focus on the case in which each individual's utility function is additive. We show that the group utility can be represented as the weighted sum of group attribute weights and, more remarkably, of attribute evaluation functions. These group attribute evaluation functions are in turn weighted sums of individual attribute evaluation functions. (Multicriteria Decision Making; Group Decisions; Preference Aggregation; Additive Representation), 1. Introduction In this paper, we focus on group decisions where a group of individuals or a committee collectively shares the responsibility for choosing among alternative proposals for action. Individual [...]

Issues of envy and fairness in a population the members of which experience benefits and risks in an uncertain environment are examined. The study investigates fairness for individuals and for homogenous groups within the population. The focus is on fairness for profiles in which benefits and risks are unaggregated within groups or across the population. The study relates fairness to concepts of envy among individuals and groups based on the preferences of the individuals. The concepts of fairness assessed in the study can be used to obtain insights into a wide range of situations, including evaluation of policy proposals, evaluation of institutional arrangements and supplementation of analyses of decisions via decision-analytic or risk-benefit models.