
Accession Number : AD0663829
Title : QUASISEPARABLE UTILITY FUNCTIONS.
Descriptive Note : Technical rept.,
Corporate Author : MASSACHUSETTS INST OF TECH CAMBRIDGE OPERATIONS RESEARCH CENTER
Personal Author(s) : Keeney,Ralph Lyons
Report Date : DEC 1967
Pagination or Media Count : 126
Abstract : The research is concerned with assessment of utility functions for multinumeraire consequences. More specifically, it is proven that given von Neumann and Morganstern's 'axioms of rational behavior' and two additional assumptions, the utility function for (x sub i, y sub i) consequences must be of the form U sub xy(x sub i, y sub i) = U sub x(x sub i) + U sub y(y sub i) + K U sub x(x sub i) U sub y(y sub i). K is a constant that must be empirically evaluated. It is shown that this form, known as a quasiseparable utility function, is more general than the separable utility function and nearly as easy to use. The implications and ramifications of such a utility function and its requisite assumptions are discussed in detail. Expressions for evaluating the expected utility of a probabilistic consequence are derived. The problems and technique of practical application of the theory are considered. A discussion of the usefulness of this work and of possible future research topics concludes the report. (Author)
Descriptors : (*DECISION THEORY, MATHEMATICAL MODELS), UNCERTAINTY, OPERATIONS RESEARCH, MOTIVATION, BEHAVIOR, COSTS, STOCHASTIC PROCESSES, THESES
Subject Categories : Operations Research
Distribution Statement : APPROVED FOR PUBLIC RELEASE