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...

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References

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Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

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