Integrating financial analysis and decision theory for the evaluation of alternative reuse scenarios of historical buildings

The expected utility theory assumes that the advantage of an agent under conditions of uncertainty can be calculated as a weighted average of the utilities in each state as possible, by using as weights the likelihood of the occurrence of individual states. The expected utility is thus an expected value (according to the terminology of the theory of probability). In order to determine the utility according to this method, it is supposed that the decision maker is be able to order their preferences with regard to the consequences of different decisions. The experiment described in the paper shows that different actors of a decision process tend “to move” the Centre of gravity of the decision to their preference. Arrow’s theorem taught that there is no unanimity. The starting point of the case of study is an analysis of the probability for different way of use of a Heritage property, related to tourism and leisure activities: Catering, Conferences and hosteling. The different actors have different preferences on each one of the three activities. Their vision partially contrasts with the likelihood of generating income through the activities. Each activity can create income as a function of use of the Fabric (for one use or for the other). The coexistence of the three forces of the combined use has a limitation, so some use combinations generate more income than others, according to a probability curve. Each actor will attempt to shift the business mix toward equilibrium that appreciates most. Whereas, as an element of interpretation of the behavior of multi-actor, Kannehman’s approach consider that each subject will see the advantage linked to a different combination from that with most likely utility; the different combination is affected by the expectations of actors, and described by the “perspective theory”.