Transcript Philosophical Aspects of Multiple Criteria Decision Making

Preference Issues in Group Decision
Making
David L. Olson
Texas A&M University
INFORMS San Antonio
Ideal
• Objective measures
Max Weber: Rational organization
labor grouped in factories;
populations massed in cities;
technical control; advertising;
planned sociological research
• Nozick: Weber’s rationality reshaped the world
• Gadamer: Weber sought to eliminate every aspect of a
worldview and all value judgments from science
• Toulmin: rational, objective, quantitative preference
Objective Measures
• Objective preferred
– can measure
• past profit, after tax
• accurate preference input
• “Rational” decision maker
Accounting: Jensen - Agency Theory
Economics: Williamson - Transaction Cost Analysis
• Subjective
– know conceptually, but can’t accurately measure
• response to advertising
MAU Group Value
N
k
m 1
i 1
Value jN   m  wi sij
Group members m=1 to N
Criteria
i=1 to k
Alternatives
j=1 to J
Dependence
Value i  1     i sij  1
k
i 1
multiplicative group utility function
under preferential dependence
(Keeney & Raiffa, 1976, p. 531)
Keeney & Raiffa [1976]
Group aggregation methods
• Supra decision maker
–
–
–
–
verifies assumptions
determines utility/value functions
assesses scaling constants
makes interpersonal comparisons of utility
“such questions are not easy”
Keeney & Raiffa [1976]
• Participatory Group Decision
– consensus would be needed
– “Agreement on scaling constants would likely
be difficult to achieve”
• Group might select the alternative they all agree is
best
• If not, they may agree on alternatives that should be
eliminated
• At least provides basis for seeking constructive
compromise
MAU Approaches
Bose, Davey & Olson, Omega, 1997
1. Determine group utility function
1a. Edwards: model the final decision maker
2. Voting
•
Or sum of ranks, or equivalent
3. Reach consensus informally
3a. Give decision maker justification
1. Group Utility Function
•
Dyer & Miles, Operations Research [1976]
– Space flight trajectory evaluation
– Individual lottery comparison, aggregated multiple ways
•
Golabi, et al., Management Science [1981]
– DOE solar energy projects
– Individual preference elicitation, mean ratings by attribute to aggregate
•
Dyer & Lund, Interfaces [1982]
– Petroleum product strategy selection
– Individual elicitation through questionnaire, expert assignment of weights
•
Thomas, et al., The Journal of Applied Behavioral Science [1989]
– Computer system installation
– NGT, individual scoring; upper management scored for group
•
Reagan-Cirincione, et al., Interfaces [1991]
– Insurance options
– Task force scoring, weights assigned to each stakeholder
2. Voting (or sum of ranks)
• Lincoln & Rubin, IEEE Transactions SCM [1979]
– Coal-fired plant strategy
– Interview individuals; aggregate by method of marks, majority rule
• Method of marks: best scenario 5, worst 1, rest by judgment
• Edwards & von Winterfeldt, Risk Analysis [1987]
– German energy, Arizona water control
– Interview, obtained individual weights; rank sums to aggregate
3. Consensus Seeking
• Ulvila & Snider, Operations Research [1980]
– Oil tanker safety negotiation
– Interviews/questionnaires, used to sort alternatives for
discussion
• Keeney, et al., Operations Research [1986]
– Electrical generation
– Interviews with pairwise tradeoffs; one respondent’s results used
because all were similar
• Jones, et al., JORS [1990]
– UK energy policy
– Utilities assessed by individuals; basis for discussion & negotiation
ACCURATE PREFERENCE
INPUT
• incomplete information
• uncertain measures
• uncertain preferences
• group participation
• risk
• time pressure: Edwards - how can you calculate
expected utility in available time?
• change
competition
complexity
Objective/Subjective
• OBJECTIVE: what is convenient to model
– ideal - eliminate bias, arbitrary judgment
– extreme: cost/benefit analysis spanning years of
measuring the unmeasurable
• SUBJECTIVE: what people do to cope
– value is subjective after all anyway
– value is what MAUT, MCDA seeks to measure
Public Rationality
• Bentham (Arrow, 1951): If
•
•
•
we admit interpersonal
comparisons of utility, we can order choices by
function of utilities
Hume (Nozick 1993): Group of individual preferences
could be irrational
Nozick [1993]: If a public decision, may need to bend
to assure others
Rosenau [1992]: Discussion in the public sphere
depends on force
– The stronger argument always carries the day
Group Rationality
• Buchanan & Tullock [1965]: only individuals can be
rational, not groups
– Individuals within groups likely to have different aims
– Individuals within groups unlikely to take into account
full marginal costs
• Arrow [1974]: There cannot be a completely
consistent meaning to collective rationality
YET: Since individual activities interact, joint
decision will be superior to separate decisions
EMPIRICAL EVIDENCE
contrary to rational choice models
Braybrooke & Lindblom [1969]; Simon [1985] Payne, et al. [1993]
• Some problems never reach decision maker
• decision makers often have simple maps of real problems
• all alternatives not known, so decision makers do not have full,
relevant information
• individual altruism
Tversky [1969]
• systematic & predictable economic intransitivities
Kahneman, Slovic & Tversky [1982]
• people use heuristics rather than follow rational model
Organizational Aspects
• Cyert & March [1959]
– Decision making in organizations
• Multiple actors
• Inconsistent preferences
J. G. March [1978]
Rational choice involves 2 guesses
• future consequences of current actions
• future preferences
Individual preferences often appear fuzzy,
inconsistent, to change over time
Interpersonal comparisons by individual across time
similar to aggregating across individuals
We are left with the weak theorems of social
welfare economics
Choices
• Arrow:
–
–
–
–
–
–
Voting
Market mechanism
Administrative discretion
Rule of law
preference endogenous
Dictatorship
Convention
preference endogenous
• Levitan & March [1957]:
– Elected representatives making bargains
Amatra Sen [1982]
• Aggregation rules
– Utilitarian
maximize weighted sum
– Rawlsian
maximize minimum
• Knight: greater tendency toward inequality under
voting than under the market
Arrow’s Impossibility
• Voting leads to possibility of intransitivity
(Nanson)
• If exclude the possibility of interpersonal
comparison of utility, only imposed or dictatorial
orderings would be satisfactory
• Black: under single-peaked preferences, majority
decision leads to transitive result for odd number
of voters
– Median of first choice
Arrow’s Social Welfare Function
Conditions
• Positive association of social and individual values
– Respond positively to changes in individual preference
• Independence of irrelevant alternatives
• Condition of citizen sovereignty
– Free to select one alternative over another
• Condition of nondictatorship
– choice not based solely on the preferences of one
individual
• Summation of utilities
– Based on ordinal, not cardinal, values
Arrow Conclusions
• Interpersonal comparison of utilities has no
meaning – so Arrow assumes only ordinal
• Doctrine of voter sovereignty is incompatible with
collective rationality
• Individuals have incentive to misrepresent their
orderings in a group setting
• The market cannot be taken as a social welfare
function since it cannot take into account altruism
Buchanan & Tullock
• Arrow requires all votes be pairwise, which leads
to cyclical majority
– Whole proof makes no sense if applied to voting
methods other than pairwise
• If allow logrolling, problem of cyclical majority
vanishes
– But logrolling is politics
– Time sequence very important
• Arrow’s wording rules out all possible voting rules
except unanimity if there is logrolling
Unanimity
• Arrow: not majority, but unanimity required
• Buchanan & Tullock: The majority rule has been
elevated to the status which unanimity should
occupy
• Buchanan & Tullock: the rule of unanimity is the
only rule indicated by widely acceptable welfare
criteria
– only this rule will produce Pareto-optimal solutions
– Inherent interdependence of individual choices makes
strategic behavior inevitable in politics
Consensus is not truth
The criteria of rationality
completely lacking in a consensus created
by sophisticated opinion-molding services
under the aegis of sham public interest
Feyerabend [1993]: Eisenstein in Potemkin knew
that history needed to be improved in order
to be exciting and meaningful
• Habermas [1991]:
•
Rely on Experts?
Political opinions should rest
on expert opinion
Dewey [Putnam 1992]: NO! Experts inevitably
removed from common interests
• Durkheim [1898]:
•
PROCESS
• Dewey [1888]: it is not the majority vote, but the
process that forms the majority that matters
• Arrow [1951]: Belief in democracy may be so
strong that decisions arrived at democratically
may be preferred to decisions reached other ways
that are better for each individual
• Buchanan & Tullock [1965]: Group decisions
result from individual decisions combined through
specific rules
Final Thoughts
• Group preference function probably doesn’t
exist
– Arrow – don’t settle for less than unanimity
– Unrealistic – have to proceed
• American’s tend to use weighted sum
– Choice – minsum or maximin
• Other approaches can be applied
– Focus on process, hope for agreement