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.     

Clustering,dependence and ratio scales in AHP: Rank reversals and incorrect priorities with a single criterion

In the analytic hierarchy process, it is often thought that rank reversals cannot occur in a single-criterion problem. This paper demonstrates that if it is necessary to cluster items under a single criterion, such reversals are possible. The reversals occur prior to aggregating across clusters and are caused by a failure to make reference to the alternatives when performing criteria comparisons. Rank reversals, however, are only a symptom of the problem. The real problem is a failure to calibrate global weights to a common scale which spans different clusters. Even in the absence of reversals, aggregated weights from the AHP's relative mode of measurement can fail to maintain composite ratio relationships.     

A Comment on ‘Rank Disagreement: A Comparison of Multi-Criteria Methodologies’

In a recent paper in this journal, Buede and Maxwell found reasonable agreement between MAVT and conventional AHP most preferred alternatives in a large-scale simulation. We show that MAVT would have had total agreement on preferred alternatives with two modified forms of AHP, referenced AHP and linking pin AHP, under simulation. © 1997 John Wiley & Sons, Ltd.     

Time complexity and consistency issues in using the AHP for making group decisions

Two different ways of using the AHP in making group decisions are compared and evaluated. The first method combines different experts’ opinions before applying an eigenvalue method to obtain final weights for decision alternatives. The second, in contrast, derives each expert's rating for the decision alternatives before combining them. Both methods take into account the relative importance of different experts in making decisions. Comparison and evaluation of these two methods are made by using two criteria: time complexity and consistency indices. A numerical example is provided to illustrate the use of these two methods, and results of a mathematical simulation are presented for comparing the time complexity in different-sized problems. © 1998 John Wiley & Sons, Ltd.     

Generating consensus priority interval vectors for group decision‐making in the AHP

Many practical and important decision‐making problems are complicated by at least two factors: (1) the qualitative/subjective nature of some criteria often results in uncertainty in the individual ratings; and (2) group decision‐making is involved and some means of aggregating individual ratings is required. Traditionally, both individual and group priorities have been represented as point estimates, but this approach presents severe limitations for accommodating imprecision in the decision‐making process. This paper examines the group decision‐making problem in the context where priorities are represented as numeric intervals. A set of techniques that could be used at some of the phases of an analytic hierarchy process (AHP)‐based group decision‐making process, which has the objective of generating a ‘consensus’ priority that represents the group's opinion with regards to the relative importance of a set of N objects (e.g. criteria, alternatives), is presented. Copyright © 2000 John Wiley & Sons, Ltd.     

Two new cases of rank reversals when the AHP and some of its additive variants are used that do not occur with the multiplicative AHP

Many researchers have long observed some cases in which certain ranking irregularities can occur when the original analytic hierarchy process (AHP), or some of its variants, are used. This paper presents two new categories of ranking irregularities which defy common intuition. These ranking irregularities occur when one decomposes a decision problem into a set of smaller problems each defined on two alternatives and the same criteria as the original problem. These irregularities are possible when the original AHP, or some of its additive variants, are used. Computational experiments on random test problems and an examination of some real‐life case studies suggest that these ranking irregularities are dramatically likely to occur. This paper also proves that these ranking irregularities are not possible when a multiplicative variant of the AHP is used. Copyright © 2001 John Wiley & Sons, Ltd.     

Euclid: Strategic alternative assessment matrix

The vast amount of information that must be considered to solve inherently ill‐structured and complex strategic problems creates a need for tools to help decision makers (DMs) recognize the complexity of this process and develop a rational model for strategy evaluation. Over the last several decades, a philosophy and a body of intuitive and analytical methods have been developed to assist DMs in the evaluation of strategic alternatives. However, the intuitive methods lack a structured framework for the systematic evaluation of strategic alternatives while the analytical methods are not intended to capture intuitive preferences. Euclid is a simple and yet sophisticated multiobjective value analysis model that attempts to uncover some of the complexities inherent in the evaluation of strategic alternatives. The proposed model uses a series of intuitive and analytical methods including environmental scanning, the analytic hierarchy process (AHP), subjective probabilities, and the theory of displaced ideal, to plot strategic alternatives on a matrix based on their Euclidean distance from the ideal alternative. Euclid is further compared to the quantitative strategic planning matrix (QSPM) in a real world application. The information provided by the users shows that Euclid can significantly enhance decision quality and the DM's confidence. Euclid is not intended to replace the DMs, rather, it provides a systematic approach to support, supplement, and ensure the internal consistency of their judgments through a series of logically sound techniques. Copyright © 2003 John Wiley & Sons, Ltd.     

Information search and mental representation in risky decision making: The advantages first principle

In three experiments the problem is investigated how people identify early in the decision process those alternatives that are worthwhile to be examined in more detail. We assume that decision makers employ the Advantages first Principle: They first search for information about positive outcomes and then focus their information search (e.g., for negative consequences or for risk defusing operators) on those alternatives that appear attractive after this initial evaluation. In Experiment 1 (120 participants), initial information about consequences was varied for eight alternatives (no information, positive consequences, negative, or mixed for four alternatives). In all conditions, the great majority of participants followed both aspects of the Advantages first Principle. In Experiment 2, 60 participants decided in two quasi‐realistic scenarios with two alternatives each. Initial information was presented so that one alternative had better positive consequences, worse negative consequences, or both. In all conditions, more information was searched for in the initially better alternative. In Experiment 3 (20 participants) the Advantages first Principle was not only confirmed for a scenario but also for choices in traditional gambling tasks with two and eight alternatives, respectively. Participants could win or lose real money. Copyright © 2010 John Wiley & Sons, Ltd.     

The modified star graph and the petal diagram: two new visual aids for discrete alternative multicriteria decision making

Many studies have looked into the provisions of visual aids to multicriteria decision making. However, most of them have separated the display of alternative profiles and criteria weight information into two displays. This makes the analysis of the relationship between the criteria and alternatives and the effect of changing the criteria weights on the decision difficult. In this study, displays that can incorporate the display of both alternative profiles and criteria weight information for discrete alternative multicriteria decision-making problems are examined. The simple additive model is the multicriteria analysis method used. The result is two new visual aids for representing data of multicriteria decision-making problems, the modified star graph and the petal diagram. This paper discusses the two displays and compares their strengths and weaknesses. The results of a preliminary test conducted to evaluate the effectiveness of the displays are also included. © 1998 John Wiley & Sons, Ltd.     

A Field Experiment Comparing Anchored and Unanchored Criteria Weights in the Analytic Hierarchy Process

This study reports the results of a field experiment comparing the predictive validity of two approaches to multicriteria assessments: the absolute measurement mode of AHP and the absolute measurement mode of linking pin AHP. The questioning procedures of the two differ only in that the former employs unanchored criteria weight assessments and the latter anchored criteria weight assessments. The decision task required insurance agents to respond to a mailed questionnaire in which they evaluated non-monetary incentives (contests) according to (1) the public recognition received from winning, (2) the criteria for winning and (3) the nature of the reward. There were four levels for each dimension. A between subjects design was used, with each subject receiving one of the two methods. In addition, all subjects divided 100 points among four contests and these hold-out assignments were employed as a validity check. Linking pin AHP was found to be superior to conventional AHP in this experiment, lending weight to the argument that the use of unanchored criteria weights is problematic. © 1997 by John Wiley & Sons, Ltd. J. Multi-Crit. Decis. Anal. 6 : 140–149 (1997) No. of Figures: 3. No. of Tables: 5. No. of References: 24.     

Integration of Analytic Hierarchy Process with Regression Analysis to Identify Attractive Locations for Market Expansion

Selection of new geographies in which to expand is a key decision for businesses aspiring to go beyond the opportunities in the existing markets. The conventional approaches of market selection can only provide a set of systematic steps for problem solving without considering the relationships between the decision factors. Decision models based on statistical techniques are able to examine the relationship between decision factors but are unable to effectively assist decision makers in identifying the most promising market, particularly in terms of prioritizing across decision factors. Analytic Hierarchy Process (AHP) is a commonly used approach for choosing alternatives by prioritizing across multiple decision factors. The typical AHP modelling requires knowledge of criteria and/or alternatives along with their relative weights, generally elicited from field experts. Quite often, firms encounter situations where decision makers are aware of only the overall objective and a set of earmarked geographies for setting up market locations while being relatively unaware of decision criteria and relative weights. This precludes using AHP to identify promising market locations. This paper conceptualizes a market selection decision model that integrates AHP with statistical modelling techniques to identify the attractive market locations for the purpose of expansion. The model first uses principal component analysis and multiple regression to determine significant decision criteria and their weights. Thereafter, it applies AHP to prioritize the market locations across the decision criteria. This integrative approach is illustrated for identifying the attractive locations in rural markets for a steel firm in India. The major advantage of this approach is that unlike the existing models, it works in situations when firms have not enough knowledge about factors for evaluating alternative market locations. Another key advantage of the proposed model is that of economizing resources for data collection on variables representing decision factors. Copyright © 2012 John Wiley & Sons, Ltd.     

Multiple Criteria Decision‐Making in Management Accounting and Control‐State of the Art and Research Perspectives Based on a Bibliometric Study

As an academic discipline as well as in practice, decision support is one of the most important functions of management accounting and control (MAC). Owing to decision settings' increasing complexity, suitable multiple criteria methods are becoming increasingly important for MAC. We, therefore, examine the extent to which certain multiple criteria decision‐making (MCDM) methods are used in the MAC context. In order to do so, we undertook an extensive bibliometric analysis of the management accounting field during the last three decades. The results indicate an increase in the importance of MCDM. Furthermore, recent research activities were classified into different areas of decision‐making within MAC since the majority of publications deal with the areas of strategic management, budgeting and performance management. More specifically, strategy and performance evaluation, strategic planning and the selection of alternatives are the most prominent MCDM applications. Our analysis reveals that the analytic hierarchy process (AHP) is the most popular analytical tool with which to support management in complex decision‐making situations. The results of the study prove that technical MAC literature does not cover a desirable range of MCDM applications and that the AHP, as well as the analytic network process (ANP) are of increasing importance in respect of the international scope of MAC. Therefore, the area of MCDM continues to be an active part of management science research and application, specifically of MAC. Copyright © 2011 John Wiley & Sons, Ltd.     

Rational or uncommitted? Depression and indecisiveness in interpersonal decision making

Two studies were run which tested the prediction that clinically depressed persons, known for difficulties in making a decision, would process predecisional information relevant to an interpersonal choice in a more impartial, less biased way than non-depressed persons. Both studies provided confirmation for this hypothesis. In each case, the depressed group focused less on specific alternatives, asked more criterion-based questions, and made decisions on the basis of information which was more evenly distributed over alternatives, thus conforming less to biasing, dominance structuring processes, than non-depressed participants. The depressed and non-depressed participants did not differ, however, in evaluative aspects of their decisions, suggesting a relative independence of affective and informational aspects of predecisional processes. The question arises: are depressed patients less biased and hence more rational when making decisions or are they just indifferent and uncommitted? The data have been discussed with reference to research on effortful versus automatic information processing in depression.     

An investigation of the role of scale values in the DS/AHP method of multi‐criteria decision making

DS/AHP is a method of multi‐criteria decision making based on the Dempster–Shafer theory of evidence and the analytic hierarchy process. Central to the utilization of DS/AHP is the composing of preference judgements on identified groups of decision alternatives (DA) across a number of criteria against all the DA present in the problem in question. This paper exposits a series of results whose objectives are to aid in the development of an effective set of preference scale values for use within DS/AHP. These results relate directly to the concomitant level of ignorance (uncertainty) with the judgements made on a single criterion. Two particular directions of investigation are undertaken, firstly in determining the necessary number of scale values available and secondly finding the necessary differences between scale values, dependent on whether an arithmetic or geometric progression is the basis for the scale values. Through an example, the implications and utilization of these results within DS/AHP are illustrated. Copyright © 2003 John Wiley & Sons, Ltd.     

Evidence for Opportunity Cost Neglect in the Poor

People often neglect opportunity costs: They do not fully take into account forgone alternatives outside of a particular choice set. Several scholars have suggested that poor people should be more likely to spontaneously consider opportunity costs, because budget constraints should lead to an increased focus on trade‐offs. We did not find support for this hypothesis in five high‐powered experiments (total N = 2325). The experiments used different products (both material and experiential) with both high and low prices (from $8.50 to $249.99) and different methods of reminding participants of opportunity costs. High‐income and low‐income participants showed an equally strong decrease in willingness to buy when reminded of opportunity costs, implying that both the rich and the poor neglect opportunity costs. © 2017 The Authors Journal of Behavioral Decision Making Published by John Wiley & Sons Ltd.     

Make‐or‐Break: Chasing Risky Goals or Settling for Safe Rewards?

Humans regularly pursue activities characterized by dramatic success or failure outcomes where, critically, the chances of success depend on the time invested working toward it. How should people allocate time between such make‐or‐break challenges and safe alternatives, where rewards are more predictable (e.g., linear) functions of performance? We present a formal framework for studying time allocation between these two types of activities, and we explore optimal behavior in both one‐shot and dynamic versions of the problem. In the one‐shot version, we illustrate striking discontinuities in the optimal time allocation policy as we gradually change the parameters of the decision‐making problem. In the dynamic version, we formulate the optimal strategy—defined by a giving‐up threshold—which adaptively dictates when people should stop pursuing the make‐or‐break goal. We then show that this strategy is computationally inaccessible for humans, and we explore boundedly rational alternatives. We compare the performance of the optimal model against (a) a myopic giving‐up threshold that is easier to compute, and even simpler heuristic strategies that either (b) only decide whether or not to start pursuing the goal and never give up or (c) consider giving up at a fixed number of control points. Comparing strategies across environments, we investigate the cost and behavioral implications of sidestepping the computational burden of full rationality.     

A Unified Nonparametric IRT Model for <Emphasis Type="Italic">d</Emphasis>-Dimensional Psychological Test Data (<Emphasis Type="Italic">d</Emphasis>-ISOP)

The (univariate) isotonic psychometric (ISOP) model (Scheiblechner, 1995) is a nonparametric IRT model for dichotomous and polytomous (rating scale) psychological test data. A weak subject independence axiom W1 postulates that the subjects are ordered in the same way except for ties (i.e., similarly or isotonically) by all items of a psychological test. A weak item independence axiom W2 postulates that the order of the items is similar for all subjects. Local independence (LI or W3) is assumed in all models. With these axioms, sample-free unidimensional ordinal measurements of items and subjects become feasible. A cancellation axiom (Co) gives, as a result, the additive isotonic psychometric (ADISOP) model and interval scales for subjects and items, and an independence axiom (W4) gives the completely additive isotonic psychometric (CADISOP) model with an interval scale for the response variable (Scheiblechner, 1999). The d-ISOP, d-ADISOP, and d-CADISOP models are generalizations to d-dimensional dependent variables (e.g., speed and accuracy of response). The author would like to thank an Associate Editor and two anonymous referees and also Professor H.H. Schulze for their very valuable suggestions and corrections.     

The Effect of Decision Strategy on Deciding to Defer Choice

Recent research has examined consumer decision making when the option of not choosing any of the alternatives is also provided. The findings from this research suggest that the decision to defer choice is sensitive to the uncertainty of choosing the most preferred option from the set of alternatives provided. Building on this research, the author tests whether the decision to defer choice is also influenced by task variables that influence decision uncertainty. In the first experiment, this proposition is tested for choice problems in which information on three relatively equally attractive alternatives is presented either sequentially or simultaneously. As predicted, the preference for the defer-choice option was greater when the three alternatives were presented simultaneously. A second study forced subjects into using one of four decision strategies in order to choose between two non-dominated alternatives. The preference for the no-choice option was found to be higher when the rule required explicit attribute tradeoffs and lower when it simplified choice. These results suggest that choice uncertainty is influenced by the decision strategy used to determine the preference among alternatives. We conclude with a discussion of the implications of the results for marketers' communication strategies.     

Participatory and multiobjective development of watercourse regulation—creation of regulation alternatives from stakeholders' preferences

Multicriteria decision analysis (MCDA) methods have been recently applied in many environmental problems. Major aims have been to structure and to analyse multifaceted and complex problems, to compare incommensurable impacts and to clarify the preference order of alternatives. Most MCDA tools concentrate on aiding the process of choice among alternatives. The choice usually occurs at the end of the decision‐making process, but MCDA tools can also assist earlier in the process. In this article, we present a new MCDA‐based method in order to create watercourse regulation alternatives, which meet the objectives of stakeholders. The method is comprised of three elements: (1) framework for the planning and learning process partly based on the Image Theory, (2) analysis and evaluation of ecological, social and economic impacts of regulation, and (3) visual interactive Excel implementation of value‐tree analysis (REGAIM‐model). We show how the method was applied in a complex watercourse regulation development project in Finland. Altogether 36 face‐to‐face computer‐aided interviews were undertaken with the REGAIM model with representatives of different stakeholder groups. We present the main results of the interviews and discuss how these interviews supported generation of new watercourse regulation alternatives. We also describe the advantages of the new approach in the participatory watercourse management, and discuss the applicability of Image Theory in the watercourse regulation context. Copyright © 2006 John Wiley & Sons, Ltd.