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.
Provides a method for rational decision making in the face of multiple objectives
Explains common mistakes and pitfalls, giving readers the tools to recognize when a method works and when it doesn't
Uses a diverse set of examples which ground the theory in practical applications
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.
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