Pairwise comparison matrices and the error-free property of the decision maker

Pairwise comparison is a popular assessment method either for deriving criteria-weights or for evaluating alternatives according to a given criterion. In real-world applications consistency of the comparisons rarely happens: intransitivity can occur. The aim of the paper is to discuss the relationship between the consistency of the decision maker—described with the error-free property—and the consistency of the pairwise comparison matrix (PCM). The concept of error-free matrix is used to demonstrate that consistency of the PCM is not a sufficient condition of the error-free property of the decision maker. Informed and uninformed decision makers are defined. In the first stage of an assessment method a consistent or near-consistent matrix should be achieved: detecting, measuring and improving consistency are part of any procedure with both types of decision makers. In the second stage additional information are needed to reveal the decision maker’s real preferences. Interactive questioning procedures are recommended to reach that goal.

Consistency of the decision-maker in pair-wise comparisons

Most authors assume that the natural behaviour of the decision-maker is being inconsistent. This paper investigates the main sources of inconsistency and analyses methods for reducing or eliminating inconsistency. Decision support systems can contain interactive modules for that purpose. In a system with consistency control, there are three stages. First, consistency should be checked: a consistency measure is needed. Secondly, approval or rejection has to be decided: a threshold value of inconsistency measure is needed. Finally, if inconsistency is ‘high’, corrections have to be made: an inconsistency reducing method is needed. This paper reviews the difficulties in all stages. An entirely different approach is to elaborate a decision support system in order to force the decision-maker to give consistent values in each step of answering pair-wise comparison questions. An interactive questioning procedure resulting in consistent (sub) matrices has been demonstrated.

Gondolkodásegyszerűsítő stratégiák hatékonysága (Simplifying decision strategies and their effectiveness)

A szerző a megelégedésre törekvő döntéshozatalt és eszközeinek, az egyszerűsítő döntési stratégiáknak a hatékonysági kérdéseit tárgyalja. Az egyszerűsítő stratégiáknak és az alkalmazásukat támogató attitűdnek nemcsak az időt, hanem az információkeresés és - feldolgozás egyéb költségvonzatait is tekintetbe véve számos előnyük van. A szerző a szakirodalom rendszerezésével rávilágít az egyéni szintű leegyszerűsítések természetére és pozitív hatásaikra. A bevezetést és a meghatározásokat követően az egyszerűsítő stratégiák hatékonysági kérdéseit tárgyalja a környezeti tényezők függvényében, majd a döntéshozó személyiségét és pszichológiai jóllétét érintő összefüggésekről ír. A tanulmány végén folyamatban lévő empirikus kutatásának kérdéseire tér rá, mely kutatás az üzleti gyakorlat empirikus vizsgálatával kíván hozzájárulni az eddig főként laboratóriumi kísérletek eredményeire épülő tudáshoz. ___________ Placing itself in the domain of bounded rationality theory, the article deals with the advantages of satisficing and of using decision heuristics. As to the approach to decision heuristics, the author stands on the positive side, not focusing on biases, but showing interest in the effectiveness potential in heuristics. As a review of recent literature, the article deals with different advantages of satisficing and of using simplifying strategies, be it cognitive advantages, the effectiveness, or advantages concerning the psychological well-being of the decision maker. Actual research questions of the „adaptive toolbox” approach, and the problem of determination by personality traits are presented based on the review of recent research results. Further research directions are indicated after the review. By presenting his research questions the author shows how he is willing to enrich the results of this research program by his own empirical work.

Adaptív döntéshozatal a beszállítóválasztásban = Adaptive Decision-making in Supplier Selection

Herbert Simon, a korlátozott racionalitás elméletének megalkotója szerint a döntéshozatalunk hatékonyságát az határozza meg, hogy korlátozott kognitív kapacitásaink birtokában milyen stratégiákkal birkózunk meg a komplex környezet kihívásaival. Az erre az elméletre építő kutatások egyik alapvetése, hogy az egyéni problémamegoldási folyamat helyzetspecifikus és ez az idomulás kulcsfontosságú az eredményességben és hatékonyságban. A döntéshozó rendelkezik egy „adaptív szerszámosládával”, amelyből a megfelelő helyzetekben a megfelelő döntési eljárásokat választja. A tanulmányban a szerző egy kvalitatív kutatás eredményeire építve, a beszállítóválasztás példáján keresztül mutat be lehetséges válaszokat a keveset kutatott kérdésre: hogyan működik az adaptivitás folyamata? A tanulmány a döntési helyzethez való alkalmazkodás kialakulását vizsgálja a döntési folyamatok kognitív szintjén. ______ Herbert Simon, the author of theory of bounded rationality claimed that the results of our decision-making is defined by the approprietness of strategies with which we handle the complexity of the environment with our bounded cognitive capacities. One of the main issues or research programs building on this theory is that problem solving is situation-specific, and the adjustment of strategies to actual situational factors is crucial for the effectiveness and efficiency of decision-making. The decision-maker possesses an „adaptive toolbox”, from which he chooses the right decision tools in the right situations. The author, based on the findnings of a qualitative study, presents possible answers to the not well-elaborated question: how does the process of adaptivity work? Forming of an adaptive mechanism is in the focus.

Ethical decision making

The self-centeredness of modern organizations leads to environmental destruction and human deprivation. The principle of responsibility developed by Hans Jonas requires caring for the beings affected by our decisions and actions. Ethical decision-making creates a synthesis of reverence for ethical norms, rationality in goal achievement, and respect for the stakeholders. The maximin rule selects the "least worst alternative" in the multidimensional decision space of deontological, goal-achievement and stakeholder values. The ethical decision-maker can be characterized as having the ability to take multiple perspectives and make appropriate balance across diverse value dimensions. Modern organizations should develop a critical sensitivity to and empathy toward human and non-human beings with which they share a common environment.

Adaptív döntéshozatal a beszállítóválasztás példáján (Adaptive decision-making on example of the supplier selection)

Ez a tanulmány a projektvezetési szakirodalomban kialakult ismeretanyagot szem előtt tartva (noha tételesen nem hivatkozva arra) tárja fel azt a sajátos és tipikusnak nevezhető kontextust, amelyben a projektalapú szervezetek projektmarketing tevékenysége megnyilvánul. A tanulmány célja tehát nem magának a projektmarketingnek a kérdéskörére irányul, hanem elsősorban annak projektspecifikus kontextusára. Jellegét illetően a tanulmány spekulatív jellegű, vagyis lényegét tekintve nem empirikus kutatási eredményekből levont következtetésekre épül. _____ The author analyses the cognitive level of individual decisions by placing the adaptive decision-maker in the centre of interest. The main question is how do adaptive processes evolve and what factors determine the adaptive mechanism. The author builds on his own qualitative study conducted with the Grounded Theory Methodology in the SME sector. The supplier selection decision is chosen from the wide range of business decisions. From the research results the two elements of the adaptive mechanism – the metastructure and the attitude set –, the process of their evolution and the factors determining this process are presented. The findings here are a middle-range theory, which can be elaborated further, but they provide some interesting insights already.

Initial inventory levels for a book publishing firm = Kezdőkészletek egy könyvkiadó vállalatnál

Egy könyvkiadó vállalatot vizsgálunk. A kiadó kiadványait a szokásos értékesítési láncon (kis- és nagykereskedelem) keresztül értékesíti. A kérdés az, hogy egy új könyv példányait hogyan allokálja az értékesítési láncban. Feltételezzük, hogy a kereslet ismert, Poisson-eloszlású. A készletezés költségeit szintén ismertnek tételezzük fel. Cél a költségek minimalizálása. = The aim of the paper is to analyze a practical real world problem. A publishing house is given. The publishing firm has contacts to a number of wholesaler / retailer enterprises and direct contact to customers to satisfy the market demand. The book publishers work in a project industry. The publisher faces with the problem to allocate the stocks of a given, newly published book to the wholesaler and retailer, and to hold some copies to satisfy the customers direct from the publisher. The distribution of the demand is unknown, but it can be estimated. The costs consist of inventory holding and shortage, backorder costs. The decision maker wants to minimize these relevant costs. The problem can be modeled as a one-warehouse and N-retailer supply chain with not identical demand distribution. The problem structure is similar that of a newsvendor model. It is assumed that the demand distribution follows a Poisson distribution.

An LP-based inconsistency monitoring of pairwise comparison matrices

A distance-based inconsistency indicator, defined by the third author for the consistency-driven pairwise comparisons method, is extended to the incomplete case. The corresponding optimization problem is transformed into an equivalent linear programming problem. The results can be applied in the process of filling in the matrix as the decision maker gets automatic feedback. As soon as a serious error occurs among the matrix elements, even due to a misprint, a significant increase in the inconsistency index is reported. The high inconsistency may be alarmed not only at the end of the process of filling in the matrix but also during the completion process. Numerical examples are also provided.

An inconsistency control system based on incomplete pairwise comparison matrices

Incomplete pairwise comparison matrix was introduced by Harker in 1987 for the case in which the decision maker does not fill in the whole matrix completely due to, e.g., time limitations. However, incomplete matrices occur in a natural way even if the decision maker provides a completely filled in matrix in the end. In each step of the total n(n–1)/2, an incomplete pairwise comparison is given, except for the last one where the matrix turns into complete. Recent results on incomplete matrices make it possible to estimate inconsistency indices CR and CM by the computation of tight lower bounds in each step of the filling in process. Additional information on ordinal inconsistency is also provided. Results can be applied in any decision support system based on pairwise comparison matrices. The decision maker gets an immediate feedback in case of mistypes, possibly causing a high level of inconsistency.

Pairwise comparison matrices: an empirical research

Our research focused on testing various characteristics of pairwise comparison (PC) matrices in controlled experiments. About 270 students have been involved in the test exercises and the final pool contained 450 matrices. Our team conducted experiments with matrices of different size obtained from different types of MADM problems. The matrix elements have been generated by different questioning orders, too. The cases have been divided into 18 subgroups according to the key factors to be analyzed. The testing environment made it possible to analyze the dynamics of inconsistency as the number of elements increased in a given case. Various types of inconsistency indices have been applied. The consequent behavior of the decision maker has also been analyzed in case of incomplete matrices using indicators to measure the deviation from the final ranking of alternatives and from the final score vector.

The Shapley value for shortest path games

In this paper shortest path games are considered. The transportation of a good in a network has costs and benet too. The problem is to divide the prot of the transportation among the players. Fragnelli et al (2000) introduce the class of shortest path games, which coincides with the class of monotone games. They also give a characterization of the Shapley value on this class of games. In this paper we consider further four characterizations of the Shapley value (Shapley (1953)'s, Young (1985)'s, Chun (1989)'s, and van den Brink (2001)'s axiomatizations), and conclude that all the mentioned axiomatizations are valid for shortest path games. Fragnelli et al (2000)'s axioms are based on the graph behind the problem, in this paper we do not consider graph specic axioms, we take TU axioms only, that is, we consider all shortest path problems and we take the view of abstract decision maker who focuses rather on the abstract problem than on the concrete situations.

The Shapley value for shortest path games

In this paper shortest path games are considered. The transportation of a good in a network has costs and benet too. The problem is to divide the prot of the transportation among the players. Fragnelli et al (2000) introduce the class of shortest path games, which coincides with the class of monotone games. They also give a characterization of the Shapley value on this class of games. In this paper we consider further four characterizations of the Shapley value (Shapley (1953)'s, Young (1985)'s, Chun (1989)'s, and van den Brink (2001)'s axiomatizations), and conclude that all the mentioned axiomatizations are valid for shortest path games. Fragnelli et al (2000)'s axioms are based on the graph behind the problem, in this paper we do not consider graph specic axioms, we take TU axioms only, that is, we consider all shortest path problems and we take the view of abstract decision maker who focuses rather on the abstract problem than on the concrete situations.

Magánnyugdíj-járadékok közötti választás (Choice amongst Hungarian pension funds' annuities )

Ebben a cikkben a magánnyugdíj-járadékok közötti választást vizsgálom. Arra vagyok kíváncsi, hogy a racionális döntéshozó hogyan választ a lehetséges járadékokból. A döntéshozó a várható hasznosságátmaximalizálja. A cikkben megvizsgálom azt az esetet is, ha a döntéshozó számára fontos, hogy gondoskodjék az utódairól, és megvizsgálom a házaspárok optimális döntését is. Felhívom a figyelmet, hogy a nemek közötti differenciálás tilalmának az lehet a következménye, hogy a döntéshozók olyan járadékokat választanak, amely a szolgáltatónak összességében veszteséget okoz. Bemutatom, hogy a halasztott járadékkal kombinált ütemezett pénzkivonás a vizsgált környezetben nem rosszabb, mint a többi lehet}oség, a döntéshozó viszont ebben az esetben a befektetési lehet}oségeket maga választhatja meg. _____________ This paper investigates the decision-maker's choice amongst the pension fund's life annuities in Hungary. Hungarian pension funds have not started providing annuities yet, and the environment requires further regulation. The most significant problems is that the annuity providers must not differentiate between sexes. Pension fund members can choose among different types of life annuities (e.g. they can choose guarantee period or joint life annutity), and the member's choice may cause loss to the annuity provider in general. Since differentation between sexes is not allowed member's opportunities may shrink (e.g. they can not choose guarantee period or joint life annuity).