Remarks on "A measure of risk and a decision-making model based on expected utility and entropy" by Jiping Yang and Wanhua Qiu (EJOR 164 (2005), 792-799)

Kathrin Fischer*, Andreas Kleine

*Corresponding author for this work

Research output: Contribution to journalLetter, comment or opinion

Abstract

Yang and Qiu [Yang, J., Qiu, W., 2005. A measure of risk and a decision-making model based on expected utility and entropy. European Journal of Operational Research 164, 792-799] suggest a new concept for decision making under risk. This concept relies on a combination of the well-known expected utility criterion and the so-called entropy. The authors claim that the approach might be used as a descriptive as well as a normative decision model. In this paper, the theoretical soundness of the concept of entropy is critically examined. The analysis is underpinned by a discussion of the properties of the respective entropy function. Furthermore, normative and descriptive features of the concept are discussed and it is shown that the usefulness with respect to both aspects is questionable.

Original languageEnglish
Pages (from-to)469-474
Number of pages6
JournalEuropean Journal of Operational Research
Volume182
Issue number1
DOIs
Publication statusPublished - 1 Oct 2007

Keywords

  • Decision analysis
  • Expected utility
  • Expected utility-entropy measure of risk

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