Refer to the discussion of the three automobiles in the section Trading Off Conflicting Objectives: The Basics.
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Refer to the discussion of the three automobiles in the section “Trading Off Conflicting Objectives: The Basics.” Suppose we had the following individual utility functions for price and life span:
U (Life Span, Price) = kL UL (Life Span) + (1 – k) LU P(Price)
a. With k L = 0.45, calculate the utility for the three cars. Which would be chosen?
b. Suppose that you are not completely comfortable with the assessment of kL = 0.45. How large could kL be before the decision changes, and what would be the new choice? How small could kL be before the decision changes, and what would be the new choice? Would you say that the choice among these three cars is very sensitive to the assessment of kL?
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Related Book For
Making Hard Decisions with decision tools
ISBN: 978-0538797573
3rd edition
Authors: Robert Clemen, Terence Reilly
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