Economics and Philosophy

Articles

ON DOMINANCE AND CONTEXT-DEPENDENCE IN DECISIONS INVOLVING MULTIPLE ATTRIBUTES

Prasanta K. Pattanaika1 and Yongsheng Xua2

a1 University of California, Riverside, USA prasanta.pattanaik@ucr.edu

a2 Georgia State University, USA yxu3@gsu.edu

Abstract

In decision-making involving multiple criteria or attributes, a decision maker first identifies all relevant evaluative attributes in making decisions. Then, a dominance principle is often invoked whenever applicable: whenever an option x is better than an option y in terms of some attribute and no worse than y in terms of any other attributes, x is judged to be better than y. If, however, this dominance principle is not applicable, then the decision maker determines the relative importance between the identified evaluative attributes, consults with contextual features of the options under consideration, and makes a decision. It is shown that the combination of these principles runs into problems in the presence of rationality properties, such as transitivity, and a weak continuity requirement on decisions. The paper gives examples from welfare economics, and theories of individual and group decisions.

(Online publication August 29 2012)

Prasanta K. Pattanaik is Professor of the Graduate Division at University of California, Riverside. He has published books and papers on welfare economics and social choice, the theory of choice and preference, trade theory, and the measurement of living standards and deprivation. He is a Fellow of the Econometric Society, the Public Choice society, and the Human Development and Capability Association. He can be reached via prasanta.pattanaik@ucr.edu

Yongsheng Xu is Professor of Economics at the Department of Economics, Andrew Young School of Policy Studies, Georgia State University. He has worked on various issues relating to theories of individual and social choice, and welfare economics. His current research focuses on the measurement of deprivation and inequality, axiomatic bargaining theory, and formation of social networks.

Footnotes

Earlier versions of this paper were presented in several conferences. We are grateful to the participants in those conferences for many helpful comments. In particular, we would like to acknowledge our intellectual debt to Salvador Barberá, Kaushik Basu, Walter Bossert, Rajat Deb, Bhaskar Dutta, Indranil Dutta, Peter Hammond, Kotaro Suzumura, Mozaffar Qizilbash and Thomas Schwartz. Comments from the two referees and the editor, Martin van Hees, are also gratefully acknowledged.