Modeling Measurable Value Functions under Uncertainty with Dempster-Shafer Theory of Probability

Abstract

This paper deals with modeling preference of a person when there exists ignorance resulting from the lack of belief. We introduce Dempster-Shafer theory of probability into a measurable value function under uncertainty, where the degree of pessimism is included in our preference model. The descriptive model proposed in this paper could handle the set element of the results in the alternatives. Therefore, the model could distinguish between “lack of belief” and “disbelief” in the preference. Consequently, our model could properly account for Ellsburg paradox which has been hard to explain using the previous utility models. This paper also describes how to determine an appropriate pessimism function.