Remarks on “A measure of risk and a decision-making model based on expected utility and entropy” by Jiping Yang and Wanhua Qiu (EJOR 164 (2005), 792–799)

Abstract

Yang and Qiu [Yang, J., Qiu, W., 2005. A measure of risk and a decision-making model based on expected utility and entropy. European Journal of Operational Research 164, 792–799] suggest a new concept for decision making under risk. This concept relies on a combination of the well-known expected utility criterion and the so-called entropy. The authors claim that the approach might be used as a descriptive as well as a normative decision model. In this paper, the theoretical soundness of the concept of entropy is critically examined. The analysis is underpinned by a discussion of the properties of the respective entropy function. Furthermore, normative and descriptive features of the concept are discussed and it is shown that the usefulness with respect to both aspects is questionable.