Interdependent Altruistic Preference Models

Abstract

Altruistic preferences or the desire to improve the well‐being of others even at one’s own expense can be difficult to incorporate into traditional value and utility models. It is straightforward to construct a multiattribute preference structure for one decision maker that includes the outcomes experienced by others. However, when multiple individuals incorporate one another’s well‐being into their decision making, this creates complex interdependencies that must be resolved before the preference models can be applied. We provide representation theorems for additive altruistic value functions for two-person, n-person, and group outcomes in which multiple individuals are altruistic. We find that in most cases it is possible to resolve the preference interdependencies and that modeling the preferences of altruistic individuals and groups is tractable.