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Some Notes on Maximum Entropy Utility

1
Department of Neurosurgery, Gachon University Gil Medical Center, 21 Namdongdaero 774, Namdong, Incheon 21565, Korea
2
College of Business and Economics, Chung-Ang University, 221 Heukseok Dongjak, Seoul 06974, Korea
*
Author to whom correspondence should be addressed.
Entropy 2019, 21(7), 637; https://doi.org/10.3390/e21070637
Received: 23 May 2019 / Revised: 21 June 2019 / Accepted: 25 June 2019 / Published: 27 June 2019
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Abstract

The maximum entropy principle is effective in solving decision problems, especially when it is not possible to obtain sufficient information to induce a decision. Among others, the concept of maximum entropy is successfully used to obtain the maximum entropy utility which assigns cardinal utilities to ordered prospects (consequences). In some cases, however, the maximum entropy principle fails to produce a satisfactory result representing a set of partial preferences properly. Such a case occurs when incorporating ordered utility increments or uncertain probability to the well-known maximum entropy formulation. To overcome such a shortcoming, we propose a distance-based solution, so-called the centralized utility increments which are obtained by minimizing the expected quadratic distance to the set of vertices that varies upon partial preferences. Therefore, the proposed method seeks to determine utility increments that are adjusted to the center of the vertices. Other partial preferences about the prospects and their corresponding centralized utility increments are derived and compared to the maximum entropy utility. View Full-Text
Keywords: decision analysis; utility; maximum entropy decision analysis; utility; maximum entropy
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Kim, E.Y.; Ahn, B.S. Some Notes on Maximum Entropy Utility. Entropy 2019, 21, 637.

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