Dealing with Interaction Between Bipolar Multiple Criteria Preferences in PROMETHEE Methods

In this paper, we consider the bipolar approach to Multiple Criteria Decision Analysis (MCDA). In particular we aggregate positive and negative preferences by means of the bipolar PROMETHEE method. To elicit preferences we consider Robust Ordinal Regression (ROR) that has been recently proposed to derive robust conclusions through the use of the concepts of possible and necessary preferences. It permits to take into account the whole set of preference parameters compatible with the preference information provided by the Decision Maker (DM)

Neo-Whorfian Examination of Cross-Linguistic Temporal Discounting Behavior

This study examines differences in temporal discounting tendencies in German and French participants (recruited through Amazon Mechanical Turk) through the lens of Neo-Whorfian cognition and the Linguistic Savings Hypothesis (Chen 2013). The LSH proposes that tendencies towards future-oriented economic decisions can be cognitively explained by literal morphosyntactic conventions of one’s native language. Our experiments (sooner-smaller/larger-later choices, endowment-investment task) failed to produce results aligning with the LSH, but uncovered the importance of controlling for risk appetite when specifically investigating intertemporal choice. There are several fruitful improvements to consider for the future, such as stricter sampling, taking richer detail of time preferences, and more robust risk controls

A Scenario-Based Parametric Analysis of Stable Marriage Approaches to the Army Officer Assignment Problem

This paper compares linear programming and stable marriage approaches to the assignment problem under conditions of uncertainty. Robust solutions should exhibit reduced variability in the presence of one or more additional constraints. Several variations of each approach are compared with respect to solution quality, as measured by the overall social welfare among Officers and Assignments, and robustness as measured by the number of changes after a number of randomized perturbations. We examine the contrasts between these methods in the context of assigning Army Officers among a set of identified assignments. Additional constraints are modeled after realistic scenarios faced by Army assignment managers, with parameters randomized. The Pareto efficient approaches, relative to these measures of quality and robustness, are identified and subjected to a regression analysis. The coefficients of these models provide insight into the impact the different scenarios under study, as well as inform any trade-off decisions between Pareto-optimal approaches

The Economies of Scale of Living Together and How They Are Shared: Estimates Based on a Collective Household Model

How large are the economies of scale of living together? And how do partners share their resources? The first question is usually answered by equivalence scales. Traditional estimation and application of equivalence scales assumes equal sharing of income within the household. This paper uses data on financial satisfaction to simultaneously estimate the sharing rule and the economy of scale parameter in a collective household model. The estimates indicate substantial scale economies of living together, especially for couples who have lived together for some time. On average, wives receive almost 50% of household resources, but there is heterogeneity with respect to the wives' contribution to household income and the duration of the relationship.collective household models, sharing rule, equivalence scale, subjective data

STRATEGIC RISK MANAGEMENT BEHAVIOR: WHAT CAN UTILITY FUNCTIONS TELL US?

The validity of the utility concept, particularly in an expected utility framework, has been questioned because of its inability to predict revealed behavior. In this paper we focus on the global shape of the utility function instead of the local shape of the utility function. We examine the extent of heterogeneity in the global shape of the utility function of decision makers and test whether its shape predicts strategic risk management behavior. We assess the utility functions and relate them to strategic decisions for portfolio managers (N = 104) and hog farmers (N = 239). The research design allows us to examine the robustness of our results and the extent to which the results can be generalized. Furthermore, we assess the shape of the utility functions for these decision makers applying two different methods. This allows us to further test the robustness of our empirical results. If there exists a relationship between the shape of the utility function and strategic decisions, both methods should yield the same result. The empirical results indicate that the global shape of the utility function differs across decision makers (fully concave or convex versus S-shaped), and that the global shape predicts strategic decisions (e.g., asset allocation strategy in the case of portfolio managers; type of production process employed in the case of hog farmers). These findings support the notion that the often criticized concept of utility is a useful concept when studying actual behavior, and highlight the importance of considering decision-maker behavior over a wide outcome range when examining strategic behavior.Risk and Uncertainty,

Term structure of psychological interest rates: A behavioural test.

Many empirical and behavioral studies underline the idea of a non-flat term structure of subjective interest rates with a decreasing slope. Using an empirical test, this paper aims at identifying in individual behaviors whether agents see their psychological value of time decreasing or not. We show that the subjective interest rate follows a negatively sloped term structure. It can be parameterized using two variables, one specifying the instantaneous time preference, the other characterizing the slope of the term structure. A trade-off law called “balancing pressure law” is identified between these two parameters. We show that the term structure of psychological rates depends strongly on gender, but appears not to be linked with life expectancy. We also question the cross relationship between risk aversion and time preference. From a theoretical point of view, these two variables stand as two different and independent dimensions of choice. However, empirically, both time preference attitude and slope seem directly influenced by risk attitude.psychological time value; behavioural economics; time preference; risk aversion; hyperbolic discounting;