[Sample B: Approval/Signature Sheet] - George Mason University

3.4 Value versus Utility
The distinction between value and utility functions is one important aspect to be
addressed when working with multiple attributes. The theoretical differences between
both concepts must be understood in order to choose the correct approach when trying to
build a value model. 52
Conventional decision analytic theories and procedures distinguish between
riskless and risk events. 53 Strictly speaking, value measures should be used when decision
making is done under conditions of certainty, in which the events are riskless. On the
other hand, in situations where a decision has to be done under uncertainty, a utility
function should be built, in order to incorporate the DM‘s attitudes toward risk.
The elicitation methods used to construct utility functions involve the use of
gambles as oppose to the methods used to construct value functions, in which the DM is
only required to rank order sure outcomes in a way consistent with his preferences. 54
Thus, in theory, utility functions are assumed to be different from value functions,
because the former incorporate risk attitudes, while value latter does not. 55
Nevertheless, there is some controversy in the literature about the distinctions of
value and utility and some authors argue that there is no distinction between the measures
of value and utility.
52
The term ―value model‖ is used here for models using utility or value functions.
53
D. von Winterfeldt and W. Edwards, Decision Analysis and Behavioral Research (Cambridge University
Press, 1986), 211.
54
Robert T. Clemen, Making Hard Decisions: An Introduction to Decision Analysis, 2nd ed. (South-
Western College Pub, 1997), 620.
55
Winterfeldt and Edwards, Decision Analysis and Behavioral Research, 212.
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