IDEAS home Printed from https://ideas.repec.org/a/inm/ordeca/v22y2025i3p227-233.html
   My bibliography  Save this article

Note: Ordinal Equivalence of Buying and Selling Prices for Information—When is Constant Risk Attitude Entailed?

Author

Listed:
  • Gordon Hazen

    (Department of Industrial Engineering and Management Sciences, Northwestern University, Evanston, Illinois 60208)

Abstract

Hazen and Sounderpandian (1999) claim to have demonstrated that ordinal equivalence of the buying price and the selling price for information entails that the utility function must have constant risk attitude (i.e., be linear or exponential). However, there is no explicit indication of the scope of the ordinal equivalence assumed—is it within any particular decision problem , or within all decision problems sharing the same utility function ? Here we explore the difference between these two assumptions, providing counterexamples for the constant risk attitude assertion in the first case, and in the second case a proof that buy-sell ordinal equivalence within all decision problems sharing the same utility forces constant risk attitude. In the first case, the simplest counterexample arises from the assertion that more refined information sources have greater information values.

Suggested Citation

  • Gordon Hazen, 2025. "Note: Ordinal Equivalence of Buying and Selling Prices for Information—When is Constant Risk Attitude Entailed?," Decision Analysis, INFORMS, vol. 22(3), pages 227-233, September.
    • Handle: RePEc:inm:ordeca:v:22:y:2025:i:3:p:227-233
    DOI: 10.1287/deca.2024.0307
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/deca.2024.0307
    Download Restriction: no
    File URL: https://libkey.io/10.1287/deca.2024.0307?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ordeca:v:22:y:2025:i:3:p:227-233. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.