Foundations of Multiattribute Utility

by Ali E. Abbas

Overview

Many of the complex problems faced by decision makers involve uncertainty as well as multiple conflicting objectives. This book provides a complete understanding of the types of objective functions that should be used in multiattribute decision making. By using tools such as preference, value, and utility functions, readers will learn state-of-the-art methods to analyze prospects to guide decision making and will develop a process that guarantees a defensible analysis to rationalize choices. Summarizing and distilling classical techniques and providing extensive coverage of recent advances in the field, the author offers practical guidance on how to make good decisions in the face of uncertainty. This text will appeal to graduate students and practitioners alike in systems engineering, operations research, business, management, government, climate change, energy, and healthcare.

Product Details

ISBN-13:	9781107150904
Publisher:	Cambridge University Press
Publication date:	06/28/2018
Pages:	480
Product dimensions:	7.28(w) x 10.24(h) x 1.38(d)

About the Author

Ali E. Abbas is Professor of Industrial and Systems Engineering and Professor of Public Policy and Governance at the University of Southern California. He directs the Center for Decisions and Ethics (DECIDE) and previously directed the Center for Risk and Economic Analysis of Terrorism Events (CREATE). His research covers all aspects of decision making under uncertainty broadly defined. He has written two books and edited two others, and has more than 100 refereed publications in the field of decision analysis. He is editor of numerous professional journals and has extensive media coverage on all aspects of decision making and risk.

Table of Contents

Part I. Foundations of Preference, Value, and Utility: 1. Preference, value, and utility; 2. Foundations of expected utility; 3. Some flawed methods of decision making; Part II. Deterministic Decisions: 4. The order rule: preferences for deterministic consequences; 5. Getting the attributes right; 6. Preference functions for single attributes; 7. Preference functions for multiple attributes; 8. Additive preference functions; 9. Valuing deterministic consequences – value functions; Part III. Decisions with Uncertainty: Multi-attribute Utility Functions Using a Value Measure: 10. Single-attribute utility function; 11. Multi-attribute utility functions using preference and value functions; 12. Utility functions over additive preference or value functions; Part IV. Decisions with Uncertainty: Properties of Single-Attribute Utility Functions: 13. The role of the utility function in valuing uncertain deals; 14. The risk aversion function; 15. Scale transformations applied to lottery outcomes; 16. The invariant transformation of a utility function; 17. Valuing changes in investment opportunities; 18. One-switch utility functions; 19. Utility transversality; 20. Multi-attribute risk aversion; Part V. Decisions with Uncertainty: Multi-attribute Utility Functions without Preference or Value Functions: 21. Attribute dominance utility; 22. The two-attribute utility tree; 23. Independence conditions for two attributes; 24. The multi-attribute utility tree; 25. Independence conditions for three or more attributes; 26. Higher-order independence conditions; 27. One-switch utility independence; Part VI. Utility Copula Formulations: 28. Multi-attribute utility copulas; 29. Archimedean utility copulas; 30. Assessing Archimedean utility copulas; 31. Utility copula functions matching all boundary assessments; 32. Bidirectional one-switch ordinal copulas; 33. Reflections of what we have learned.

Editorial Reviews

'Ali E. Abbas’ new book on utility theory is a comprehensive treatment ranging from simple distinctions about facing uncertainty to general multiattribute utility theory. Beginning with a general approach to MAU, it then specializes to show how popular versions, such as additive utility, are actually very restrictive and other simple approaches, such as additive value functions with risk aversion, are much more general. He derives the complete forms of multiattribute utility functions having additive value functions. With utility transversality, he also demonstrates that there is only one dimension of risk attitude, as the value function translates risk attitude across dimensions. Abbas’s book promises to be the standard reference work for decades to come.' Jim Matheson, Chairman and CFO, SmartOrg, Inc.

'Foundations of Multiattribute Utility provides a much-needed update, a comprehensive structure, and indeed a vision for a field that has blossomed in the forty years since Keeney and Raiffa’s Decisions with Multiple Objectives. The book synthesizes recent results by others and by the author, including an elegant copula representation. Thanks to the book’s accessible style - which even includes Socratic dialogues - readers will appreciate its place within the rich mathematics of preference and economic utility theory and the rich practice of decision analysis. The book offers many rewards for modelers in these fields, while for researchers it is required reading.' Jeffrey M. Keisler, University of Massachusetts, Boston

'The definitive work on preference, value, and utility that can serve the full range of decision situations. If you need to tackle a complex multiattribute preference problem, the answer is in this book. Ali E. Abbas has created a great text of a graduate course and a valuable reference for the practitioner.' Carl Spetzler, Strategic Decisions Group and author of Decision Quality

'In Foundations of Multiattribute Utility, Ali E. Abbas has brought together divergent themes of research in decision-making with multiple objectives into a single, coherent whole. This book can serve as an introduction for decision-makers who want to think carefully about making trade-offs. It is also a reference for researchers who want to understand the latest developments in the field. I know I will be keeping this book close at hand in my office for years to come.' Jason Merrick, Virginia Commonwealth University

'This book is a long overdue. It is encyclopedic in nature, chronicling many recent developments in utility theory, while summarizing the classical results in the field. The book is a perfect companion to Keeney and Raiffa’s (1976) seminal book on multiattribute utility. It should be on the desk of any decision analyst, economist, or statistician who does research in or teaches utility theory.' Kenneth C. Lichtendahl, Jr, University of Virginia

From the Publisher