|
on Utility Models and Prospect Theory |
| By: | Felipe A. Csaszar; John C. Eklund |
| Abstract: | The long-standing unitary-actor assumption in strategy research -- treating firms as monolithic entities with coherent preferences -- misses that organizations are coalitions of individuals with diverse and often conflicting goals. Although behavioral perspectives have challenged this assumption, the field lacks an operational method for deriving an organizational utility function from the disparate preferences of its members and the specific structures used to aggregate them. We develop a mathematical framework that (i) maps individual utility functions into choice probabilities via a random-utility model, (ii) combines those probabilities using an explicit aggregation structure (e.g., unanimity or polyarchy), and (iii) recovers an organizational utility function that rationalizes the collective behavior. This establishes organizational utility functions as operationally meaningful: they summarize and predict organizational choice, yet are generally not simple averages of members' utilities. Instead, aggregation structures systematically reshape preferences -- unanimity approximates the pointwise minima of underlying utility functions, amplifying risk aversion; polyarchy approximates the pointwise maxima, promoting risk-seeking. We illustrate strategic implications in Cournot competition and principal-agent settings, showing how internal aggregation structures shift competitive and collaborative outcomes. Overall, the framework provides a parsimonious way to retrofit unitary-actor models with behaviorally grounded organizational preferences, reconciling the coalition view of the firm with rigorous and tractable strategic analysis. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.20518 |
| By: | Alfio Giarlotta; M. Ali Khan; Angelo Enrico Petralia; Francesco Reito |
| Abstract: | In mainstream neoclassical economics, utility maximization is the only engine of individual action, and the other or the social, if it is modeled for decisions deemed fundamental, it is done as a tacit externality parameter affecting an agent's maximized payoff. And even when hitched to a social reference point, a fully decisive and immediate response is invariably assumed. In this paper, we propose a non-standard articulation of the trade-off between personal utility and social distance, one motivated by experimental evidence from psychology, management science, and economics. Our approach deconstructs non-recurrent consumer choice to two stages: a non-decisive first stage in which a binary relation, called one-many ordering, yields an interval, the consideration set, to which the deferred choice is confined; a decisive second stage in which the distance from the average social choice, and future social expectations, are taken into account in present utility. Finally, we embed this indecisive consumer in an exploratory game-theoretic setting, and show that indecisiveness and choice deferral may cause social loss. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.14631 |
| By: | Peter Caradonna; Christopher Turansick |
| Abstract: | We characterize the identified sets of a wide range of stochastic choice models, including random utility, various models of boundedly-rational behavior, and dynamic discrete choice. In each of these settings, we show two distributions over choice rules are observationally equivalent if and only if they can be obtained from one another via a finite sequence of simple swapping transforms. We leverage this to obtain complete descriptions of both the defining inequalities and extreme points of these identified sets. In cases where choice frequencies vary smoothly with some parameters, we provide a novel global-inverse result for practically testing identification. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.19950 |
| By: | Federico Echenique (UC Berkeley - University of California [Berkeley] - UC - University of California); Matías Núñez (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We describe a sequential mechanism that fully implements the set of efficient outcomes in environments with quasi-linear utilities. The mechanism asks agents to take turns in defining prices for each outcome, with a final player choosing an outcome for all: Price & Choose. The choice triggers a sequence of payments, from each agent to the preceding agent. We present several extensions. First, payoff inequalities may be reduced by endogenizing the order of play. Second, our results extend to a model without quasi-linear utility, to a setting with an outside option, robustness to max-min behavior and caps on prices. |
| Keywords: | Prices, Mechanism, Subgame-perfect implementation, Efficiency |
| Date: | 2025–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05511714 |
| By: | Santiago Burone;; Koen Decancq; |
| Abstract: | When individual preferences are incomplete, the information available for well-being measurement is interval-valued rather than point-identified. We show that in this case, well-being measurement involves an unavoidable normative choice: any procedure that delivers policy-relevant complete rankings must resolve incomparability in a substantive way. We axiomatically characterize wellbeing measures under incomplete preferences and show that any measure satisfying four natural axioms must aggregate the bounds using a Hurwicz criterion indexed by a parameter that governs the weight placed on the upper bound. We then use survey data from 2, 050 Dutch adults to document that incomplete preferences over income, health, and social relations are empirically prevalent. Different resolutions of incompleteness have first-order distributive consequences. In particular, evaluating individuals at the lower bound systematically prioritizes those with the most incomplete preferences rather than those with the lowest outcomes: only 42 percent of individuals in the bottom decile under the lower-bound approach remain there under the upper-bound approach, and measured inequality varies by up to five Gini points. Measuring well-being under incomplete preferences therefore requires explicit normative choices about how interval-valued information is aggregated. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:hdl:wpaper:2601 |
| By: | Cheaheon Lim |
| Abstract: | This paper develops a theory of learning under ambiguity induced by the decision maker's beliefs about the collection of data correlated with the true state of the world. Within our framework, two classical results on Bayesian learning extend to the setting with ambiguity: experiments are equivalent to distributions over posterior beliefs, and Blackwell's more informative and more valuable orders coincide. When applied to the setting of robust Bayesian analysis, our results clarify the source of time inconsistency in the Gamma-minimax problem and provide an argument in favor of the conditional Gamma-minimax criterion. We also apply our results to a persuasion game to illustrate that our model provides a natural benchmark for communication under ambiguity. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.07634 |
| By: | Sanae El-Amraoui (UAE - Abdelmalek Essaadi University [Tétouan] = Université Abdelmalek Essaadi [Tétouan]); El Aaroubi (UAE - Abdelmalek Essaadi University [Tétouan] = Université Abdelmalek Essaadi [Tétouan]) |
| Abstract: | Abstract : The introduction on the stock market constitutes a considerable strategic opportunity for Moroccan SMEs, offering them access to new financing and the opportunity to increase their reputation. However, the use of the stock exchange remains restricted in this sector. This article aims to study the factors influencing the IPO decision of Moroccan SME managers, by adopting a global approach that combines Ajzen's planned behavior model and the contributions of behavioral finance. We used bibliometric analysis and systematic review to examine the patterns and trends of subject area , with the main focus on citations as the primary measurement unit . Leveraging tools such as Scopus and VOSviewer, the analysis involves 28 papers to unveil evolving trends and scholarly contributions spanning from 2020-2025 . This analysis is important to filling a gap in the researched field because no other bibliometric study has been done on the same topic before .It will also serve to provide a scientific foundation for following research .The results showed that the behavioral biases in particular Overconfidence, optimism, Loss aversion, Herding, risk perception significantly influence the decision of SME managers to resort to an IPO. Overconfidence, optimism, Herding, risk perception has a positive impact, motivating executives to regard the IPO as a profitable option. As a result, the combination of behavioral biases and Theory of Planned Behavior makes it possible to better explain the intention of SMEs to go public than economic or financial factors alone . Keywords: Behavioral finance, IPO, Moroccan SMEs, TPB, Behavioral Biases , Overconfidence |
| Abstract: | Déclaration de divulgation : L'auteur n'a pas connaissance de quelconque financement qui pourrait affecter l'objectivité de cette étude. |
| Keywords: | Overconfidence, Behavioral Biases, TPB, Moroccan SMEs, IPO, Behavioral finance |
| Date: | 2025–12–18 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05440332 |