Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- Acknowledgments
- 1 Electronic Commerce and Electronic Marketplaces
- 2 Internet Marketplaces – A Technical Perspective
- 3 The Diffculty of Setting Prices
- 4 Methods for the Analyses and Design of Electronic Markets
- 5 Automated Negotiations – A Survey of State-of-the-Art Practices
- 6 Experimental Analysis of Multi-Attribute Auctions
- 7 Economic Models of Multi-Attribute Auctions
- 8 Conclusions and Perspectives
- Appendix: Utility Theory and Decision Analysis Techniques
- References
- Index
Appendix: Utility Theory and Decision Analysis Techniques
Published online by Cambridge University Press: 22 September 2009
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- Acknowledgments
- 1 Electronic Commerce and Electronic Marketplaces
- 2 Internet Marketplaces – A Technical Perspective
- 3 The Diffculty of Setting Prices
- 4 Methods for the Analyses and Design of Electronic Markets
- 5 Automated Negotiations – A Survey of State-of-the-Art Practices
- 6 Experimental Analysis of Multi-Attribute Auctions
- 7 Economic Models of Multi-Attribute Auctions
- 8 Conclusions and Perspectives
- Appendix: Utility Theory and Decision Analysis Techniques
- References
- Index
Summary
There is a bear dancing on a ball in a circus. We should not criticize the bear that it dances clumsily. Rather, we should marvel that it dances at all.
(Anonymous)Utility theory and decision analysis have a long tradition in microeconomics, operations research as well as in business administration. The following sections will introduce the basic concepts of both disciplines. Understanding these is important to the conceptual design ofmulti-attribute auctions and to the practical implementation of these mechanisms.
Basic Ideas of Utility Theory
The theory of utility dates back to over a century ago. “Utility” and “value” are synonyms for many researchers, therefore, the term “utility” is used throughout the text. Microeconomists were the first to analyze consumers' preferences and utilities. This research has a long, complicated and controversial history and is as old as economics itself. At the present time economists still do not agree on the real meaning of utility and the way in which it should be defined (Metha, 1998).
Existence of a Utility Function
In the nineteenth century economists saw “utility” as an indicator of a person's overall well-being or happiness. The first explicit and systematic use of the concept of utility to explain value of commodities can be found in Jevons' classical Theory of Political Economy (1871). Jevons did not, however, distinguish between preference and utility.
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- The Future of e-MarketsMultidimensional Market Mechanisms, pp. 206 - 229Publisher: Cambridge University PressPrint publication year: 2001