Efficiency versus Sustainability in Dynamic Decision Making
-- Advances in Intertemporal Compromising



Lecture Notes in Economics and Mathematical Systems






1 Introduction
I Decision Theoretical Foundation
2 Fundamentals of Decision Making
2.1 Structure and Classification of Decision Models
2.2 The Set of Alternatives.
2.3 Kinds of Objectives.
2.4 Optimality ..... .
3 Fundamentals of Multi-criteria Decision Making
3.1 The General MODM-model
3.2 Dominance and Efficiency
3.3 Compromise Methods ..
3.3.1 Method of Weighting Objective Functions
3.3.2 Method of Weighted Distance Functions
3.3.2.1 Distance-minimization Method
3.3.2.2 Distance-maximization Method. 55
3.3.2.3 Synopsis of Distance-based Methods 72

II Dynamic Decision Making 75
4 Fundamentals of Dynamic Decision Making 77
4.1 The Set of Alternatives ............ . 82
4.2 Basic Types of Objectives in Dynamic Decision Making 88
5 Type A Objective: 'The Destination Matters' 91
5.1 Problem Formulation. . . . . . . . . . . 93
5.2 Refinements of the General Formulation 96
5.3 Optimality................. 101
6 Type B Objective: 'The Journey is the Goal' 107
6.1 Problem Formulation . . . . . . . . . 109
6.2 Dynamic Dominance and Efficiency . 119
6.3 Compromise Models ......... 139
6.3.1 Method of Weighting Periodic Objectives 141
6.3.2 Method of Weighted Periodic Distances 152
6.4 Sustainability as Objective. 163
6.4.1 A Formal Definition 166
6.4.2 Satisficing Objective without Maximizing Behavior 178
6.4.3 Satisficing Objective with Maximizing Behavior. 182
6.4.4 Afterthought .................. 188
7 Multiple Objectives in Dynamic Decision Making 191
7.1 Multiple Type A Objectives . . . . . 193
7.2 Multiple Objectives of Hybrid Types 194
7.2.1 Problem Formulation . 195
7.2.2 Efficiency Aspects 196
7.2.3 Compromise Models 207

7.2.4 Sustainability Revisited
7.3 Multiple Type B Objectives .
7.3.1 Problem Formulation.
7.3.2 Efficiency Aspects .
7.3.3 Compromise Models
7.3.4 Sustainability Revisited
8 Concluding Remarks
List of Figures
Symbols and Notation
Bibliography
Index