Utility Functions: A Compromise Programming Approach to Specification and Optimization

Nowadays, utility theory and compromise programming (CP) are considered very different paradigms and methodologies to measure preferences as well as to determine decision maker's optima on an efficient frontier. In this paper, however, we show that a utility function with separate variables (presented in the form of a Taylor series around the ideal point) is reducible to a weighted sum of CP distances. This linkage between utility and compromise (based on a main assumption in which the usual utility functions hold) leads to (i) a method for specification and optimization of usual utility functions by operational technique and (ii) a reformulation of standard CP with the advantage of determining the best CP solution from a utility perspective. © 1997 John Wiley & Sons, Ltd.