Decisions in Economics and Finance

, Volume 23, Issue 1, pp 53–74

Decision analysis using targets instead of utility functions

  • Robert Bordley
  • Marco LiCalzi


A common precept of decision analysis under uncertainty is the choice of an action which maximizes the expected value of a utility function. Savage's (1954) axioms for subjective expected utility provide a normative foundation for this principle of choice. This paper shows that the same set of axioms implies that one should select an action which maximizes the probability of meeting an uncertain target. This suggests a new perspective and an alternate target-based language for decision analysis. We explore the implications and the advantages of this target-based approach for both individual and group decision-making.

Mathematics Subject Classification (2000): 91B06, 91B10, 90B50 
Journal of Economic Literature Classification: D81 


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Copyright information

© Springer-Verlag Italia 2000

Authors and Affiliations

  • Robert Bordley
    • 1
  • Marco LiCalzi
    • 2
  1. 1.Knowledge Network, GM Research Development Center¶e-mail: robert.bordley@gm.comIT
  2. 2.Department of Applied Mathematics, University “Ca' Foscari” of Venice¶e-mail: licalzi@unive.itIT

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