VALUE

Value can be either objective or subjective. In the latter case, it means subjective worth or importance. For example, "the value of future benefits to thedecision maker," "the value of clean air to the society." For the purposes of analysis, the subjective values must be measured on some scale. These measures of value should be based on preferences expressed by the person or group of interest.

In [VALUE ANALYSIS,] one considers that the value v is related to the physical or other objective measure y of a consequence by a subjectively defined [VALUE FUNCTION,] so that v = f(y). A value function usually departs from proportionality, i.e.,it usually is a nonlinear dependence. A typical example is the subjective value of money to an individual: the first l,000 schillings in his savings account are probably of more value to him that the l,000 schillings that would increase the state oh his account from 100,000 to 101,000 schillings. The value of a multiattribute consequence with VALUE-RELEVANT ATTRIBUTES y1,y2,..yn can be expressed by a MULTIATTRIBUTE VALUE function, v(yl,y2,..yn). A multiattribute value function must satisfy the following condition: v(yl,y2,..yn) is greater than or equal to v(y'l,y'2,..y'n)

if and only if the multiattribute consequence (yl,y2,..yn) is preferred or indifferent to (y'1,y'2..,y'n).

Several theories exist according to which a multiattribute value function V(.) can, in appropriate cases, be expressed as an aggregate of single-attribute functions Vi(.). For example, the additive [CONJOINT measurement theory] assumes that

                                   n
               v(yl,y2,..,yn) = SUM  Vi(yi).
                                  i=l

See also: utility, decision theory (IIASA)

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