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A refined utility function for modeling “me” vs. “us” allocation in a sequential group decision process

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  • Dmitry Gimon

    (Park University)

  • Alexandre Bevilacqua Leoneti

    (University of São Paulo)

Abstract

Considering the psychological aspects of altruism and reciprocity in strategic interactions, we propose using the Cobb–Douglas utility function to refine standard utility functions as a weighted product of the player’s utility (“me” factor) and the jointly utility of players (“us” factor). We model an altruism willingness function to define the strategic allocation within “me” vs. “us” based on perceived kindness of the counterparts during the past agreements and unconditional altruism. Numerical examples are presented to show how the model represents the sequential group decision process of players with heterogeneous altruism profiles.

Suggested Citation

  • Dmitry Gimon & Alexandre Bevilacqua Leoneti, 2020. "A refined utility function for modeling “me” vs. “us” allocation in a sequential group decision process," EURO Journal on Decision Processes, Springer;EURO - The Association of European Operational Research Societies, vol. 8(1), pages 1-12, May.
    • Handle: RePEc:spr:eurjdp:v:8:y:2020:i:1:d:10.1007_s40070-019-00102-8
    DOI: 10.1007/s40070-019-00102-8
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    References listed on IDEAS

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    1. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    2. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    3. Leoneti, Alexandre Bevilacqua, 2016. "Utility Function for modeling Group Multicriteria Decision Making problems as games," Operations Research Perspectives, Elsevier, vol. 3(C), pages 21-26.
    4. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
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