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Normative target-based decision making

✍ Scribed by Ali E. Abbas; James E. Matheson

Book ID
102506157
Publisher
John Wiley and Sons
Year
2005
Tongue
English
Weight
213 KB
Volume
26
Category
Article
ISSN
0143-6570

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✦ Synopsis

Abstract

This paper relates normative expected‐utility decision making to target‐based decision making, and introduces a new quantity, the aspiration equivalent. We show that using the aspiration equivalent as a target provides a new method for choosing between lotteries that is consistent with expected‐utility maximization. Furthermore, we show that the aspiration‐equivalent target provides a win–win situation for executive–manager delegation. This result furnishes a new link between normative decision analysis and target‐based decision making. Copyright © 2005 John Wiley & Sons, Ltd.

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