Acquisition of decision making criteria: reward rate ultimately beats accuracy

Speed-accuracy trade-offs strongly influence the rate of reward that can be earned in many decision-making tasks. Previous reports suggest that human participants often adopt suboptimal speed-accuracy trade-offs in single session, two-alternative forced-choice tasks. We investigated whether humans acquired optimal speed-accuracy trade-offs when extensively trained with multiple signal qualities. When performance was characterized in terms of decision time and accuracy, our participants eventually performed nearly optimally in the case of higher signal qualities. Rather than adopting decision criteria that were individually optimal for each signal quality, participants adopted a single threshold that was nearly optimal for most signal qualities. However, setting a single threshold for different coherence conditions resulted in only negligible decrements in the maximum possible reward rate. Finally, we tested two hypotheses regarding the possible sources of suboptimal performance: (1) favoring accuracy over reward rate and (2) misestimating the reward rate due to timing uncertainty. Our findings provide support for both hypotheses, but also for the hypothesis that participants can learn to approach optimality. We find specifically that an accuracy bias dominates early performance, but diminishes greatly with practice. The residual discrepancy between optimal and observed performance can be explained by an adaptive response to uncertainty in time estimation.     

Aspiration/reservation-based decision support—a step beyond goal programming

Real-life decision problems are usually so complex that they cannot be modelled with a single objective function, thus creating a need for clear and efficient techniques for handling multiple criteria to support the decision process. A widely used technique and one commonly taught in general OR/MS courses is goal programming, which is clear and appealing. On the other hand, goal programming is strongly criticized by multiple-criteria optimization specialists for its non-compliance with the efficiency (Pareto-optimality) principle. In this paper we show how the implementation techniques of goal programming can be used to model the reference point method and its extension, aspiration/reservation-based decision support. Thereby we show a congruence between these approaches and suggest how the GP model with relaxation of some traditional assumptions can be extended to an efficient decision support technique meeting the efficiency principle and other standards of multiobjective optimization theory.     

A non-linear multi-criteria model for strategic fms selection decisions

The strategic decision of selecting an optimal flexible manufacturing system (FMS) configuration is a complicated question which involves evaluating trade-offs between a number of different, potentially conflicting criteria such as annual production volume, flexibility, production and investment costs and average throughput of the system. Recently, several structured multicriteria approaches have been proposed to aid management in the FMS selection process. While acknowledging the non-linear nature of a number of the relationships in the model, notably between batch size and the number of batches produced of each part, these studies used linear simplifications to illustrate the decision dynamics of the problem. These linear models were shown to offer useful analytical tools in the FMS pre-design process. Owing to the non-linearities of the true relationships, however, the trade-offs between the criteria could not fully be explored within the linear framework. This paper builds on the two-phase decision support framework proposed by Stam and Kuula (1991) and uses a modified non-linear multi-criteria formulation to solve the problem. The software used in the illustration can easily be implemented, is user-interactive and menu-driven. The methodology is applied to real data from a Finnish metal product company and the results are compared with those obtained in previous studies.     

Simple Threshold Rules Solve Explore/Exploit Trade-offs in a Resource Accumulation Search Task

How, and how well, do people switch between exploration and exploitation to search for and accumulate resources? We study the decision processes underlying such exploration/exploitation trade-offs using a novel card selection task that captures the common situation of searching among multiple resources (e.g., jobs) that can be exploited without depleting. With experience, participants learn to switch appropriately between exploration and exploitation and approach optimal performance. We model participants' behavior on this task with random, threshold, and sampling strategies, and find that a linear decreasing threshold rule best fits participants' results. Further evidence that participants use decreasing threshold-based strategies comes from reaction time differences between exploration and exploitation; however, participants themselves report non-decreasing thresholds. Decreasing threshold strategies that “front-load” exploration and switch quickly to exploitation are particularly effective in resource accumulation tasks, in contrast to optimal stopping problems like the Secretary Problem requiring longer exploration.     

Clusters,Criteria and Calibration—a Reply to Hauser and Peniwati

Hauser and Peniwati have criticized our papers on the grounds that (1) clusters are not criteria and (2) transformable multiple-criteria problems are really single-criterion problems. They claim that the axiom of independence only applies to criteria. Although in agreement with several of their statements, we point out that the axiom applies to levels and that criteria priorities must perform a calibration (scaling) function if composite ratio results are to be achieved.     

A multicriteria approach for material yard planning

The material yard is the origin of the production process for manufacturing firms. If materials are not stored at appropriate locations of the yard, then the stacking operation and the subsequent reclaiming operation will be inefficient in terms of time. In this paper a multicriteria approach which utilizes local trade-offs between different criteria in the absence of an explicit overall preference function is proposed to solve the material yard planning problem. The idea is to linearize the unknown preference function at a given point in the solution space. If the trade-offs between different criteria at this point can be determined via some mechanism, then a better solution can be derived. This process is continued until it converges to a stationary point, namely the optimal solution. To illustrate this idea, a case of the China Steel Co. in Taiwan is presented. The results from a simulation study indicate that the proposed approach is able to find a very good solution which satisfies all the criteria in a rather short transition period. © 1997 John Wiley & Sons, Ltd.     

Adaptive expertise: Effects of type of experience and the level of theoretical understanding it generates

This research investigates the development of transferable—“adaptive”—expertise. The study contrasts problem-solving performance of two kinds of experts (business consultants and restaurant managers) on novel problems at the intersection of their two domains, as well as a group of novices (non-business undergraduates). Despite a lack of restaurant experience, consultants performed better than restaurant managers and undergraduates, even though the problems concerned a restaurant. Process measures suggest this was due to the use of more theoretical reasoning. Analyses show this resulted from differences in work experience and not other factors (e.g., education). We discuss aspects of experience that might be responsible for development of theoretical understanding and, thus, expertise that transfers to novel problems. One possible explanation, consistent with existing research from multiple approaches, is that to transfer to novel problems, experience must include substantive variability. The social context of learning may also play a role.     

Acceptability of urban transport pricing strategies

Several research projects all over the world have considered transport pricing measures and policies as promising attempts to solve urgent traffic problems in urban areas. One important precondition for the successful implementation of pricing strategies is public acceptability. However, empirical findings have shown that the acceptability of such strategies is low. Until now economists have been looking for reasons for this refusal by analysing first of all socio-economic characteristics of the drivers concerned. But it is doubtful whether these alone have high explanatory value. Based on a heuristic acceptability model [IATSS Research 21 (1997) 134] different determinants of the acceptability of road pricing strategies are identified and analysed in more detail. A public acceptability survey was carried out in four European cities (N=952 motorists) to investigate two main questions. Firstly, how high is the current acceptability level of different urban transport pricing strategies? Secondly, do the factors as outlined in the acceptability model explain the level of acceptability? As expected, motorists’ stated acceptability of the investigated pricing strategies is rather low. Concerning the factors influencing the degree of acceptability the analyses showed that in particular the variables ‘social norm’, ‘personal outcome expectations’ and the ‘perceived effectiveness’ are positively related with the acceptability of pricing strategies. These variables account for nearly 40% of the criterion variance and thus can explain acceptability of such measures much better than the socio-economic variables included.     

The application of correspondence analysis to multiple-criteria decision making

The aim of this paper is to show how correspondence analysis can be a useful aid in multiple-criteria decision making, particularly in the case of categorical criteria values. Under different types of input information, the technique is used to perform some preliminary analyses with a bonus of providing a simultaneous graphical representation of the alternatives and criteria. This picture can provide a better understanding of the structure of the two sets of variables to the decision maker before a decision is made.     

Item selection procedures for item variables with a known factor structure

This paper discusses the item selection problem when the item responses follow a linear multiple factor model. Because of this restrictive assumption, not too unrealistic in situations such as mental testing, it is possible to select optimal sets of items without going through all possible combinations. A method proposed by Elfving to accomplish this is analyzed and then demonstrated through the use of two illustrations. The common and often used procedure of observing the magnitude of the correlation coefficient as an index in item selection is shown to have some merit in the single-factor case.Work performed under contract AF 41(657)-244 with the School of Aviation Medicine, Randolph AFB, Texas.     

Regulatory focus as a predictor of attitudes toward partitioned and combined pricing

Partitioned pricing is a widely used pricing strategy, but little is known about the buyer characteristics that influence its effectiveness. The current research contributes to the pricing literature by investigating the impact of regulatory focus on the perceived attractiveness of partitioned and combined pricing. In four studies, we hypothesized and found support for the idea that promotion focused individuals perceive partitioned prices to be more attractive than combined prices, while prevention focused individuals do not differentiate between the two pricing types. Our results also show that regulatory focus influences consumers' information processing style, which in turn leads to important differences in attitudes towards partitioned and combined pricing. Specifically, promotion focused consumers are more likely to engage in global processing and global processing is linked to preferences for partitioned (versus combined) prices.     

Gender differences in the pricing of professional services: Implications for income and customer relationships

This study extends our understanding of the effects of gender on both pricing behavior and owner income by examining both relationships in an experimental simulation involving owners of veterinary practices. Consistent with prior research, women owners are found to employ “compassionate pricing” more than men, even when the same services are offered. The process by which gender influences price, however is found to depend in part on one’s relationship orientation. Specifically, women are found to have a higher relationship orientation than men and relationship orientation is found to directly bias women’s transactional pricing towards more compassionate pricing. The relationship between role orientation, pricing, and income, however, is rather complex. While lower prices have a negative relationship with owner income, relationship orientation is found to have a positive direct influence on income. As a result, the influence of relationship orientation on income is found to be both negative, due to lower prices, and positive, due possibly to the resulting customer loyalty.     

Speed/accuracy trade-offs in target-directed movements

This target article presents a critical survey of the scientific literature dealing with the speed/accuracy trade-offs in rapid-aimed movements. It highlights the numerous mathematical and theoretical interpretations that have been proposed in recent decades. Although the variety of points of view reflects the richness of the field and the high degree of interest that such basic phenomena attract in the understanding of human movements, it calls into question the ability of 'many models to explain the basic observations consistently reported in the field. This target article summarizes the kinematic theory of rapid human movements, proposed recently by R. Plamondon (1993b; 1993c; 1995a; 1995b), and analyzes its predictions in the context of speed/accuracy trade-offs. Data from human movement literature are reanalyzed and reinterpreted in the context of the new theory. It is shown that the various aspects of speed/accuracy trade-offs can be taken into account by considering the asymptotic behavior of a large number of coupled linear systems, from which a delta-lognormal law can be derived to describe the velocity profile of an end-effector driven by a neuromuscular synergy. This law not only describes velocity profiles almost perfectly, it also predicts the kinematic properties of simple rapid movements and provides a consistent framework for the analysis of different types of speed/accuracy trade-offs using a quadratic (or power) law that emerges from the model.     

Optimization of Social Structure in Business Networks by Grid-Technique and Polyhedral Analysis

This article deals with the definition and analysis of the social, communicative, and cognitive abilities of managers acting in network contexts. We can tackle the complex relationship of role demands and role adoption by applying grid-technique and polyhedral analysis. We can gather data on context-specific personal constructs with the help of the grid technique. Using these data, polyhedral analysis shows how defined persons are integrated into the relation structures within a network. Beyond this, we show if and how relevant criteria such as holes, connectivity, and eccentricity can be employed for analyzing problems stemming from personnel management. Based upon the applied methods, it is possible to provide information about the relevant structures within networks used in personnel selection and competency development. Decision makers have the task to select among the measures of personnel management. Within the relevant context, these measures should be suited to ensure the stability and efficiency of the network.     

Reduction of pairwise comparisons in decision making via a duality approach

Although pairwise comparisons have been seen by many as an effective and intuitive way for eliciting qualitative data for multi‐criteria decision making problems, a major drawback is that the number of the required comparisons increases quadratically with the number of the entities to be compared. Thus, often even data for medium size decision problems may be impractical to be elicited via pairwise comparisons. The more the comparisons are, the higher is the likelihood that the decision maker will introduce erroneous data. This paper introduces a dual formulation to a given multi‐criteria decision making problem, which can significantly alleviate the previous problems. Some theoretical results establish that this is possible when the number of alternatives is greater than the number of decision criteria plus one. Copyright © 1999 John Wiley & Sons, Ltd.     

Psychophysical methods in study of consumers' perceived price change for food products

When adjusting product prices, marketers wish information concerning consumers' price perceptions. The present study aimed to develop an optimal pricing framework for food products by applying Weber's Law and Stevens' Power Law in psychophysics. The first phase attempted to measure the differential thresholds when magnitudes of prices were raised and lowered. The second phase was conducted to establish the psychophysical function representing perceived changes. Analysis showed consumers' differential thresholds were positively correlated with the initial price, consistent with Weber's Law. Further, participants' perceived change differed for increased and decreased prices. Products were perceived as cheaper only when medium-and low-priced products dropped dramatically in price. However, small reductions for the high-priced products were perceived as cheaper. Regardless of price changes, participants perceived products were more expensive when prices dropped by a small     

An Interactive Approach for Multicriteria Decision Making Using a Tchebycheff Utility Function Approximation

Multicriteria decision making (MCDM) can provide an efficient mean for considering various and conflicting objectives to reveal the alternative that maximizes the decision maker's (DM) utility. In this paper, we propose a new interactive MCDM method for implicit alternatives to help a DM obtain a most preferred solution. We employ a Tchebycheff function to generate weights for objectives consistent with the DM's responses to pairwise comparisons between alternatives and present a mixed integer linear programming formulation to generate these weights. Thus, we approximate the DM's utility function by a Tchebycheff function and generate weights consistent with the DM's responses. We test our approach with different true utility functions on various sized multiple criteria linear programming problems. The computational results show that even with non‐Tchebycheff true utility functions, our method can generate alternatives very close to the optimal solution with few questions. The comparison of our results with other methods reveals its advantages. Copyright © 2013 John Wiley & Sons, Ltd.