Utility Measurement in Integrative Negotiation

This paper develops an adjustment to utility measurement in integrative negotiation where the negotiation information context is incomplete. The developed function reveals not only win-win outcomes but also deceptive practices where negotiators accept a win-lose deal and then compensate their loss in a deceptive way and greedy practices where negotiators realize their strong competitive position and try to extremely maximize their gains. However, to realize the objective, the utility measurement function literature and theories are reviewed to determine the relevant function structure and the necessary attributes that reveal the desired outcome in an incomplete information context. After examination, relationship measurement is added to the function under two utilities: Decision Utility and Experienced Utility. The foundation of the utility measurement function contributes to revealing satisfying win-win outcomes in an incomplete information negotiation context. Therefore, it develops the negotiation field by designing win-win deals that are beneficial and satisfying in which the advantage is distributed between the negotiators.

The Temperature of the Brain

In 1881, Francis Ysidro Edgeworth attempted to provide a solid psychological basis for utility measurement. I will show that Edgeworth’s main struggle was to provide a possible measurement scale for a feeling—pleasure—using some kind of physical magnitude that would have allowed both intra and interpersonal comparisons, thus justifying the use of mathematical techniques to answer welfare issues. Edgeworth found inspiration in a similar quest, the invention of temperature, which had permitted the transformation of a feeling, “coldness,” into a physical quantity, temperature. Edgeworth faced two kinds of criticisms: concerning the use of psychological notions in economics and concerning the nature of utility itself. Both criticisms were also stated in terms of the thermodynamic metaphor, and the thermometer analogy played a major role in the exchanges. Following those criticisms and his own analysis, Edgeworth would move from a ratio to an ordinal understanding of utility, despite never abandoning the idea that economics should be psychologically grounded.

Entangled Economists

It is 50 years since the first Nobel Prize in economics was awarded to Jan Tinbergen and Ragnar Frisch. This article analyzes the collaborations between these pioneers of econometrics which spanned four decades and various subfields in economics, based on records of their correspondence. It is demonstrated that, while Frisch was largely responsible for theoretical breakthroughs, Tinbergen was responsible for making them public and popularizing them. This is especially relevant for understanding the development of econometric models in the 1950s, decision models of the 1950s, and subsequent work on utility measurement. This division of labor is analyzed in relation to the goals they pursued in their research and their respective perfectionistic (Frisch) and pragmatic (Tinbergen) approaches to economic science. Both men shared a sense of deep social responsibility, but differences in their personalities and approaches to science generated important differences in scientific recognition and policy influence. Although they are both widely remembered for helping to turn economics into a quantitative empirical science, this article shows that they were motivated by separate personal and political goals which shaped their scientific approaches.

Book Reviews

Daniel Read of Warwick Business School, University of Warwick reviews “Measuring Utility: From the Marginal Revolution to Behavioral Economics,” by Ivan Moscati. The Econlit abstract of this book begins: “Reconstructs the history of utility measurement in economics from the marginal revolution of the 1870s to the beginning of behavioral economics in the mid-1980s.”