Multi-stakeholder decision theory

Abstract

Decisions made by people at work often have outcomes for their employer (sales, costs, profits) and for themselves personally (career progression, bonus), which are not perfectly aligned across the choice options. When such misalignment exists, decision-makers at all levels in organizations must evaluate choices in terms of conflicting outcomes across stakeholders. Existing theories of agency and stewardship provide very different answers to this question, and utility theory does not address this question at all: it assumes that the decision maker will act so as to maximize the expected utility of the firm, essentially a pure steward position. Yet we see commonplace practices of incentives a..