Preferences, Utility, and Stochastic Approximation

Abstract

A complex system with human participation like “human-process” is characterized with active assistance of the human in the determination of its objective and in decision-taking during its development. The construction of a mathematically grounded model of such a system is faced with the problem of shortage of mathematical precise information that presents the human activity. A solution of this problem is to seek expression of different aspects of the complex system through description of the expert's preferences as an element of the system. The presentation of human preferences analytically with utility functions is an approach for their mathematical description. The objective of the article is to present an innovative approach to value driven modeling of management that bases on preference-oriented decision making. It is described a decision technology that realizes measurement of human's preferences as analytic utility function. The utility theory and stochastic approximation are possible solution of this problem that results in a value-based approach to modeling of complex systems.