Utility function derived from affective balance theory

Abstract

We propose a novel way to define a utility function, which is based on the differential equations of Affective Balance Theory. Introduced in 1987, that theory is more general than the Nobel Prize winning Prospect Theory, but remained poorly understood by the decision-making community due to its bottom-up approach to choice behaviour involving biophysical models of neuron interactions. Under the assumptions of equation equilibrium, and equivalence between utility and satisfaction, we obtain an analytical formula for the agent’s utility function. Into that formula, we set constants to values determined in advance from a mix of a psychological experiment with 129 participants and a computational optimizing procedure. The new utility function is asymmetric with respect to gains and losses, exactly as in Cumulative Prospect Theory.