Encyclopedia of Operations Research and Management Science

2001 Edition
| Editors: Saul I. Gass, Carl M. Harris

Utility theory

  • Peter Fishburn
Reference work entry
DOI: https://doi.org/10.1007/1-4020-0611-X_1096

Utility theory is the systematic study of preference structures and ways to represent preferences quantitatively. The objects on which preferences are defined could be potential outcomes of a decision, decision alternatives, individual or family consumption bundles in a fixed time period, time streams of net profits, investment portfolios, the entrees on a restaurant menu, or just about anything else. The preferences themselves are usually those of an individual, but are sometimes attributed to groups or organizations.

Let A denote the set of objects on which preferences are defined and let ⩾ be a binary relation on A, that is, a set of ordered pairs (x, y) of objects in A. When (x, y) is a member of ⩾, it is customary to write xy and to say that x is at least as preferred as y. If xy and not(yx), then xis (strictly) preferred to y; if xy and yx then x and y are equally preferred, or are indifferent; if neither xy nor yx then x and y are preferentially incomparable...

This is a preview of subscription content, log in to check access.


  1. [1]
    Eatwell, J., Milgate, M., and Newman, P., eds. (1990). The New Palgrave: Utility and Probability, Macmillan, London.Google Scholar
  2. [2]
    Fishburn, P.C. (1970). Utility Theory for Decision Making, Wiley, New York.Google Scholar
  3. [3]
    Fishburn, P.C. (1988). Nonlinear Preference and Utility Theory, The Johns Hopkins University Press, Baltimore.Google Scholar
  4. [4]
    Fishburn, P.C. (1991). Nontransitive Preferences in Decision Theory, Jl. Risk & Uncertainty 4, 113–134.Google Scholar
  5. [5]
    Keeney, R.L. and Raiffa, H. (1976). Decisions with Multiple Objectives: Preferences and Value Trade-offs, Wiley, New York.Google Scholar
  6. [6]
    Luce, R. D. and Suppes, P. (1965). Preference, Utility and Subjective Probability, In Handbook of Mathematical Psychology, III, R. D. Luce, R. R. Bush and E. Galanter, eds. Wiley, New York, 249–410.Google Scholar
  7. [7]
    Page, A.N., ed. (1968). Utility Theory: A Book of Readings, Wiley, New York.Google Scholar
  8. [8]
    Raiffa, H. (1968). Decision Analysis: Introductory Lectures on Choice under Uncertainty, Addison-Wesley, Reading, Massachusetts.Google Scholar
  9. [9]
    Savage, L.J. (1954). The Foundations of Statistics, Wiley, New York.Google Scholar
  10. [10]
    Wakker, P.P. (1989). Additive Representations of Preferences, Kluwer, Dordrecht, The Netherlands.Google Scholar

Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  • Peter Fishburn
    • 1
  1. 1.AT&T Bell LaboratoriesMurray HillUSA