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Preference intensity measurement

  • Part III Risk Attitudes And Preference Intensities
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Abstract

The concept of preference intensity has been criticized over the past sixty years for having no substantive meaning. Much of the controversy stems from the inadequacy of measurement procedures. In reviewing the shortcomings of existing procedures, we identify three objectives for developing a satisfactory procedure: (1) the capability of validating expressed preference differences by actual choices among naturally occurring options, (2) compatibility with the existing problem structure, and (3) no confounding of extraneous factors in the measurement of preference intensity. Several recently developed measurement procedures are criticized for failing one or more of these objectives. We then examine three different approaches for measuring preference intensity based on multiple perspectives. Thereplication approach emerges as a promising way of satisfying the three objectives above. This methodology applies to problems where an attribute can be replicated by “parallel components” that are independent, identical copies of the attribute. We illustrate the approach with two applications reported in the decision analysis literature. We also offer guidance on how to construct parallel components satisfying the requisite properties.

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Authors and Affiliations

  1. Graduate School of Industrial Administration, Carnegie-Mellon University, 15213, Pittsburgh, Pennsylvania, USA

    Peter H. Farquhar

  2. Graduate School of Management, The University of California at Irvine, 92717, Irvine, California, USA

    L. Robin Keller

Authors
  1. Peter H. Farquhar
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  2. L. Robin Keller
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Farquhar, P.H., Keller, L.R. Preference intensity measurement. Ann Oper Res 19, 205–217 (1989). https://doi.org/10.1007/BF02283521

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