### Abstract

Original language | English |
---|---|

Pages (from-to) | 686-706 |

Number of pages | 21 |

Journal | European Journal of Operational Research |

Volume | 264 |

Issue number | 2 |

Early online date | 10 Jul 2017 |

DOIs | |

Publication status | Published - 16 Jan 2018 |

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### Keywords

- multiple criteria analysis
- quitable preferences
- generalized Lorenz dominance
- conditional dominance
- interactive approaches

### Cite this

*European Journal of Operational Research*,

*264*(2), 686-706 . https://doi.org/10.1016/j.ejor.2017.07.018

}

*European Journal of Operational Research*, vol. 264, no. 2, pp. 686-706 . https://doi.org/10.1016/j.ejor.2017.07.018

**Capturing preferences for inequality aversion in decision support.** / Karsu, Özlem; Morton, Alec; Argyris, Nikos.

Research output: Contribution to journal › Article

TY - JOUR

T1 - Capturing preferences for inequality aversion in decision support

AU - Karsu, Özlem

AU - Morton, Alec

AU - Argyris, Nikos

PY - 2018/1/16

Y1 - 2018/1/16

N2 - We investigate the situation where there is interest in ranking distributions (of income, of wealth, of health, of service levels) across a population, in which individuals are considered preferentially indistinguishable and where there is some limited information about social pref- erences. We use a natural dominance relation, generalized Lorenz dominance, used in welfare comparisons in economic theory. In some settings there may be additional information about preferences (for example, if there is policy statement that one distribution is preferred to an- other) and any dominance relation should respect such preferences. However, characterising this sort of conditional dominance relation (specifically, dominance with respect to the set of all symmetric increasing quasiconcave functions in line with given preference information) turns out to be computationally challenging. This challenge comes about because, through the as- sumption of symmetry, any one preference statement (“I prefer giving $100 to Jane and $110 to John over giving $150 to Jane and $90 to John”) implies a large number of other preference statements (“I prefer giving $110 to Jane and $100 to John over giving $150 to Jane and $90 to John”; “I prefer giving $100 to Jane and $110 to John over giving $90 to Jane and $150 to John”). We present theoretical results that help deal with these challenges and present tractable linear programming formulations for testing whether dominance holds between any given pair of distributions. We also propose an interactive decision support procedure for ranking a given set of distributions and demonstrate its performance through computational testing.

AB - We investigate the situation where there is interest in ranking distributions (of income, of wealth, of health, of service levels) across a population, in which individuals are considered preferentially indistinguishable and where there is some limited information about social pref- erences. We use a natural dominance relation, generalized Lorenz dominance, used in welfare comparisons in economic theory. In some settings there may be additional information about preferences (for example, if there is policy statement that one distribution is preferred to an- other) and any dominance relation should respect such preferences. However, characterising this sort of conditional dominance relation (specifically, dominance with respect to the set of all symmetric increasing quasiconcave functions in line with given preference information) turns out to be computationally challenging. This challenge comes about because, through the as- sumption of symmetry, any one preference statement (“I prefer giving $100 to Jane and $110 to John over giving $150 to Jane and $90 to John”) implies a large number of other preference statements (“I prefer giving $110 to Jane and $100 to John over giving $150 to Jane and $90 to John”; “I prefer giving $100 to Jane and $110 to John over giving $90 to Jane and $150 to John”). We present theoretical results that help deal with these challenges and present tractable linear programming formulations for testing whether dominance holds between any given pair of distributions. We also propose an interactive decision support procedure for ranking a given set of distributions and demonstrate its performance through computational testing.

KW - multiple criteria analysis

KW - quitable preferences

KW - generalized Lorenz dominance

KW - conditional dominance

KW - interactive approaches

U2 - 10.1016/j.ejor.2017.07.018

DO - 10.1016/j.ejor.2017.07.018

M3 - Article

VL - 264

SP - 686

EP - 706

JO - European Journal of Operational Research

JF - European Journal of Operational Research

SN - 0377-2217

IS - 2

ER -