Stock Evaluation Using a Preference Disaggregation Methodology

This paper presents a real application of a multicriteria decision aid (MCDA) approach to portfolio selection based on preference disaggregation, using ordinal regression and linear programming (UTADIS method; UTilités Additives DIScriminantes). The additive utility functions that are derived through this approach have the extrapolation ability that any new alternative (share) can be easily evaluated and classified into one of several user-predefined groups. The procedure is illustrated with a case study of 98 stocks from the Athens stock exchange, using 15 criteria. The results are encouraging, indicating that the proposed methodology could be used as a tool for the analysis of the portfolio managers' preferences and choices. Furthermore, the comparison with multiple discriminant analysis (either using a stepwise procedure or not) illustrates the superiority of the proposed methodology over a well-known multivariate statistical technique that has been extensively used to study financial decision-making problems.     

Utility‐consistent Brand Demand Systems with Endogenous Category Consumption: Principles and Marketing Applications*

This paper introduces the design and implementation of utility‐consistent, brand, and category demand systems. It extends formal demand analysis to the area of brand and category demand, which directly concerns marketing researchers and managers. The proposed brand demand system is a set of interrelated demand functions that are derived explicitly from a utility function describing consumer preferences. The model generalizes by the integration of category expenditures, which are determined endogenously. The theoretical plausibility of the proposed demand model is demonstrated first and, subsequently, brand and category level systems are derived. Econometric methods for estimating the systems are also developed and illustrated in empirical data. The results yield empirically determined, quantitative insights into the structure of consumer demand for brands and product categories. The proposed approach has the attractive feature of structuring the interdependencies of consumer decisions and ensuring an explicit role for theory in applied research.