Utility Theory

This paper examines the preference-based approach to the identification of beliefs. It focuses on the main problem to which this approach is exposed, namely that of state-dependent utility. First, the problem is illustrated in full detail. Four types of state-dependent utility issues are distinguished. Second, a comprehensive strategy for identifying beliefs under state-dependent utility is presented and discussed. For the problem to be solved following this strategy, however, preferences need to extend beyond choices. We claim that this a necessary feature of any complete solution to the problem of state-dependent utility. We also argue that this is the main conceptual lesson to draw from it. We show that this lesson is of interest to both economists and philosophers.

In this paper we investigate how the framing of m ultipart pricing schemes impact consumer behavior in the purchase of bundles of inf ormation goods. Transaction utility theory suggests that customized bundles with identical composition and cost may yield different transactional utilities for the same consumer depen ding on how the pricing is framed. We show that a consumer's perception of the "merits of the deal" for an initial minimum bundle purchase can significantly impact probability of sale and bu ndle size. Specifically, we find that when consumers perceive higher initial transaction utili ty they are more likely to make purchase. However, for purchasing consumers lower perceived initial transaction utility correlates with larger bundle sizes. The results are derived empir ically from a natural experiment of custom music CD sales. The results of this research sugge st that sellers can effectively adjust the characteristics of multipart pricing schemes influe nc...

The costly, time-consuming and complicated process of Enterprise Risk Management (ERM) can be improved in many companies and made less tedious for managers by using reasonable data and templates obtained from the peer group entities. The models used to calculate Economic Capital (EC) often underestimate its value because they do not consider decision maker perception about risk, which are absorbed by the enterprise and transferred outside of the enterprise. We assumed that mangers as the decision makers have appropriate business understanding and they can provide substantial information about risk characteristics regarding all business processes. Therefore we are focused, in this paper, on collecting data from the managers across the different businesses to derive the appropriate knowledge about the risky events, importance of particular type of risks, relationship between the risk outcomes and the level of risk control in a particular industry. We conclude that the collected data h...

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The title of the book, Motivating Students by Design, was chosen because the author explains how instructors can motivate students intentionally through the design of their courses. The two primary purposes of this book are to present a motivation model that can be used to design instruction and to provide practical motivation strategies and examples that can be used to motivate students to engage in learning. Based on decades of research, Dr. Brett Jones presents a framework to organize teaching strategies that motivate students. All of the strategies presented are followed by several examples, which provide readers with over 100 ideas for how the strategies can be implemented in courses. This book will be useful to graduate students and beginning professors, as well as professors who are more experienced and want to refine their instruction or try new strategies.

We provide a preference foundation for decision under risk resulting in a model where probability weighting is linear as long as the corresponding probabilities are not extreme (i.e., 0 or 1). This way, most of the elegance and mathematical tractability of expected utility is maintained and also much of its normative foundation. Yet, the new model can accommodate the extreme sensitivity towards changes from 0 to almost impossible and from almost certain to 1 that has widely been documented in the experimental literature. The model can be viewed as ‘‘expected utility with the best and worst in mind’’ as suggested by Chateauneuf, Eichberger and Grant (2007) or, following our preference foundation, interpreted as ‘‘expected utility with consistent optimism and pessimism’’.

This paper presents a comparative view of Islamic economic rationalism and
consumption framework to its counterpart’s conventional capitalist and socialist
economic system. In conventional economic system, only self-interest and rationality
of the consumer is the main principle to maximize utility whereas moral, religious,
national, historical, cultural and social values are absent here. Consequently, the
consumers enjoy sovereignty with little or no intervention of regulatory authority to
maximize the utility. On the contrary, Islamic economic system designs its rationality
and consumption principle in moderation that is far away from extremism where
freedom and regulation is moderately recognized. Therefore, Islamic rationality
encourages the consumers to maximize his utility by insuring religious, national,
historical, cultural and social values. Besides, conventional economics have no
treatment to immoral activities of consumer while Islamic economics derived from
the Holy Quran and Hadith offers rewards and punishments for moral and immoral
activities in worldly and hereafter life.
Key words: Rationalism, Consumption, Islamic Economics, Consumer Sovereignty, Moral and Social Values

Utility is a fundamental notion of orthodox (mostly neoclassical) economics, but as it is an idea, that is very vague and thus impossible to define and measure, it did a lot of harm to economics as a science. Therefore, I strongly argue that this outdated and imprecise concept should be finally abandoned, especially as a basis for microeconomic consumer theory, because it is not only illogical, but also ideologically not neutral, and thus unscientific. For sheer inertia, the concept of utility, as a basis for microeconomic theory, is taught to the students, thus corrupting the young minds. Furthermore, the present financial and economic crisis, the most serious since the 1930s, should force the economists from the academia to seriously revise the foundations of microeconomic theory, and, as logical consequence, rewrite the handbooks in microeconomics. I do not merely argue that the utility theory defies both logic and empirical justification, as many authors did it before me. I argue that the very notion of utility is unscientific, and was kept in microeconomic books only because of sheer inertia, but this way it made a lot of harm to the science of economics, and, as a result to the real economies. I also argue that the subjectivist theory of value should be replaced with an objectivist one, based on value of labour.

Português do Brasil:
Neste trabalho, são expostas primeiramente noções e propriedades relativas ao conceito de “agente inteligente”, dando ênfase aos diferentes tipos de programa de agente, principalmente àquele baseado em utilidade. Em seguida, passa-se a prover uma explicação detalhada da lógica e dos componentes conceituais por trás dos algoritmos genéticos. Na seqüência, é apresentada a proposta deste trabalho: propor uma metodologia de especificação automática de funções de utilidade para agentes inteligentes mediante a evolução de seus parâmetros. Isso é feito lançando-se mão de um algoritmo genético customizado. Para fins de validação da proposta, foi especificada manualmente uma função de utilidade para um jogo virtual multiagente, sendo que os parâmetros (pesos) desta função passaram a ser posteriormente otimizados via um algoritmo genético customizado. Algumas simulações computacionais foram realizadas neste estudo de caso como forma de prover uma análise quantitativa e qualitativa da abordagem proposta.

English:
Coming soon.

This article investigates plate glass as a new material medium in the art, architecture, and design in eighteenth-century China. By situating the production and consumption of plate glass in the processes of material, technological, and artistic and cultural exchanges in the early modern world, I examine how the uses of plate glass during China’s high Qing era (1662–1795) correspond to an epistemological shift to fictionality and illusionism, as well as a scopic culture of observation. Specifically, I look at the use of plate glass in painting, architectural construction (as in windowpanes), and interior display (mirrors and object coverings). Through examining the techniques and methods of using plate glass in those forms, I argue that the use of it as a novel material medium triggered new ways for people to recognize the self in relation to surroundings—knowing and experiencing spaces through bodily movement and action as well as disembodied imagination.

En este escrito se analiza el debate que hubo entre varios economistas y filósofos de la ciencia a mediados del siglo XX entorno al realismo de los supuestos de los modelos de la economía. Según Milton Friedman, no importa que los supuestos que se usen para elaborar modelos sean falsos. El criterio central que debe usarse para juzgar un modelo es si sus predicciones son exitosas o no. Ante eso, Herbert Simon respondió de manera crítica, reivindicando la importancia del " realismo de los supuestos " dado que la teoría estándar no puede predecir las conductas de los agentes reales que no son perfectamente racionales. Por el contrario, estos tienen capacidades cognitivas limitadas que les impiden realizar los cómputos requeridos por los modelos neoclásicos. En este escrito se sugiere que Simon formuló una pregunta de investigación que no se podía responder desde los modelos tradicionales de elección racional que le llevó a crear una nueva idealización sobre el agente racional. En este escrito se hace una relectura instrumenalista no-friedmaniana de ambos autores, y al final se reivindica una posición pluralista en la elaboración de modelos, señalando que ambos modelos usan diferentes idealizaciones que buscan responder diferentes preguntas de investigación. Palabras clave: supuestos como si, racionalidad acotada, utilidad esperada, tipos ideales, entendimiento Abstract: In this paper it is analized the debate that happened in the middle of the XX century among several economists and philosophers of science about the realism of assumptions in economic models.

Este trabalho apresenta o desenvolvimento teórico sobre a análise de projetos de exploração e produção de petróleo, desde a avaliação econômica tradicional através do Fluxo de Caixa Descontado até a apresentação da Teoria da Utilidade Multiatributo (MAUT), que possibilita a consideração dos riscos e incertezas típicos dos investimentos internacionais no setor upstream do petróleo em um novo ambiente competitivo entre as firmas. Por fim, o trabalho inclui um estudo de caso sobre a aplicação da MAUT na priorização de dez oportunidades exploratórias offshore ao redor do mundo oferecidas a uma multinacional brasileira fictícia de acordo com as preferências dos tomadores de decisão sobre aspectos operacionais, políticos e tecnológicos.

Descriptive decision theory is concerned with characterising and explaining regularities in the choices that people are disposed to make. It is standardly distinguished from a parallel enterprise, normative decision theory, which seeks to provide an account of the choices that people ought to be disposed to make. Much of the work in this area has been devoted to the building and testing of formal models that aim to improve on the descriptive adequacy of a framework known as 'Subjective Expected Utility' (SEU). This adequacy was first called into question in the middle of the last century and further challenged by a slew of experimental work in psychology and economics from the mid 1960's onwards. This entry first sketches out the basic commitments of SEU, before moving on to some of its best-known empirical shortcomings and a small selection of those models that have been proposed to supersede it. The relation between descriptive decision theory and its normative counterpart is then discussed, drawing some connections with a number of related topics in the philosophical literature.

Money is real. Few other objects are perceived with comparable attention. At the same time its content, its mystery, evaporates behind its physical form. For every commodity producing human society money has been a steady companion since it emerged 1. Money forms, the way in which money took on its material cloth, have changed a lot. Money forms, the blood running through almost all social interaction, have been a mirror, a reflection of the essence of a society's working. This paper is an attempt to look behind the veil that money forms as sign systems for social value produce.

Web Service Computing is a recent evolution in Distributed Computing series and it is an emerging and fast growing paradigm in the present scenario. Web Service Computing is a diversified discipline suite that related to the technologies of Business Process Integration and Management, Grid / Utility / Cloud Computing paradigms, autonomic computing, as well as the business and scientific applications. It applies the theories of Science and Technology for bridging the gap between Business Services and IT Services. Service oriented computing addresses how to enable the technology to help people to perform business processes more efficiently and effectively, ultimately resulting in creating WIN-WIN strategy between the business organizations and end users. The greatest significance of the web services is their interoperability, which allows businesses to dynamically publish, discover, and aggregate a range of Web services through the Internet to more easily create innovative products, business processes and value chains both from organization and end user points of views. Due to these, this cross discipline attracts the variety of researchers from various disciplines to conduct the versatile research and experiments in this area.

A survey of:

- Linear utility function;
- Logarithmic utility function;
- Exponential utility function;
- The utility function u(x) = x/(x + 1).

This text of mine was twice deleted from the Wikipedia chapter "Utility".
First, when I was editing it, an admin presented a false accusation that I had extensively referred only to myself, and deleted it.
Second, when I published the present, almost finished version, where the picture of references was clear, it was deleted again, already without adding any comments.

Liberty or Freedom, many believe, should be the foundation of any social relation. It is unanimously accepted today that; only a  society which is organized on the principle of equal liberty to all, could be a self-developing democratic society. In such a scenario, the meaning we give to the emotion, feeling or discourse of ‘freedom’ becomes cardinal to build a society which is ideal for living. Recent experiences has shown that , the meaning of freedom given by the common people has started to show its contradictions in the society. We are encountering innumerous instances where, the exercise of liberty of one person is negating the freedom of the other and the state which is expected to ensure equal liberty is found forlorn. This paper tries to locate the reasons for these contradictions on the meaning of ‘liberty’ in philosophical traditions and tries to develop a ‘context-specific’ concept of Liberty, a concept of liberty, if internalized will create lesser or no contradictions in the society and will aid in creating contented and happier communities.

Product development firms continually struggle to simultaneously keep product cost low while increasing product quality. This paper focuses on variation and its impact on the quality-failure costs-scrap, rework, extra labor, customer dissatisfaction, and product returns. In many cases, reducing quality failures requires an increase in product cost. Balancing these two costs is challenging because perfect information about process variability is rarely, if ever, available. As a result of process variation uncertainty, there is no clear optimal solution to the quality-failure cost/unit cost tradeoff. The author has observed that companies take one of two approaches to this dilemma: optimistic or pessimistic. The optimistic approach risks high rework costs to ensure the lowest cost product. On the other hand, the pessimistic approach forgoes potential unit cost reductions to avoid any quality failure. This paper presents a utility theory model of decision making under process capability uncertainty. This model is used to describe why either approach can be optimal depending on the organization, market, and product characteristics. In addition, information value theory is applied to explain the relative value of process capability information and variation reduction in the two approaches. The paper uses a frequently encountered design scenario to demonstrate the approach. In addition, a variety of other examples from industry are used to describe how the theory can be applied.