Stability Analysis of Dynamic Equilibria

Information for decision making is classified into four elements: alternatives, criteria, outcomes, and preferences. By the assumption of procedural rationality, a decision maker always collects and uses information necessary to form expectations about various alternatives and makes his choices from Pareto-optimal alternatives. The Pareto-optimality of an alternative depends on evaluation criteria, the assessments of criterion functions, and the existence of other relevant alternatives. Therefore, Pareto-equilibria will dynamically change with time and new information input. This paper studies the stability of dynamic Pareto-equilibria in a process of multicriterion decision making. Both local and global measures of stability are proposed and their equivalence is proved. Conditions for a sequence of equilibria to be stable are identified.