BACKGROUND TO MCDA
MCDA is a transparent way to systematically collect and process objective information, express and communicate subjective judgements concerning choice from a set of alternatives affecting several stakeholders. Such a systematic, rational, and transparency of judgements most probably leads to more effective and efficient decisions by individuals or groups of decision makers.Value judgement4 is essential in comparisons of 2 or more alternatives/criteria. Such value judgement in MCDA is also expressed in the form of value function when handling criterion performance besides also in setting appropriate weight settings etc. Historically, Multiple Criteria Evaluation methods were developed to select the best alternative from a set of competing options.These included single criteria methods for example cost benefit analysis, decision tree analysis and payoff tables, and many other methods of Multiple Criteria Decision Making methods "MCDM". During its early development MCDM devoted itself to the core issue of formalizing decision methodologies within the analytical tradition.The emphasis was on developing and testing procedures for criteria measurement, weight evaluation, integration of partial views, and option selection. Several comprehensive surveys of these technical issues of spatial decision analysis were produced during the 1980s and early 1990s (Jean-Claude Thill, 1998). Over the years, these methods have evolved into a diverse range of decision aid techniques that can be 4. Values are subjective evidence specific to the problem.These are opinions, views, attitudes, prejudices, assumptions and interpretations that are difficult to measure but have important influences on the decision-making process.They are often used to test desirability and answer the question "is the decision right?" (Luc Boerboom and Ali Sharifi, 2002). Research on improving the assessment techniques for value function are still in progress (Marjan van Herwijnen, 1999).
used in many different decision making processes to: - structure the decision problem and improve the understanding of the main issues involved in the decision; - identify and assess the effect and impact of policy alternatives in various forms; - identify pros and cons of various management processes to support feed back and feed forwards; - identify pros and cons of various management options, and support the evaluation of multiple policy alternatives; - transparent and effective presentation of the choice of options and priorities - support reasoning in negotiations; and - analyse the sensitivity and robustness of options with respect to the selected criterion. DECISION MAKING PARADIGMS AND APPROACHES
Before describing the actual process of MCDA application, it is useful to mention the two main paradigms for decision-making 5 and their related decision models. i) Objective rationality (substantive rationality) where decision process results in selection of the best solution i.e. selection of an optimal course of action. It is also known as multi-objective decision making (MODM). It is sometimes viewed as a natural extension of mathematical programming, where single or several objective functions are considered simultaneously. ii) Procedural rationality (bounded rationality) where procedure to reach the best solution is optimal i.e. search for satisfied alternative rather than
Planning Tools
...a new preference assessment method...called structured pair-wise comparison, is a slight variation of the Analytic Hierarchy Process (AHP) (Saaty, 1980). AHP...is relatively difficult, time consuming and even sometimes tedious on the participants; especially when participants are not familiar with the Saaty scale.
optimal alternative.Therefore, selection of a course of action, which is only good enough, is the objective.This is supported by simulation and multiattribute decision-making (MADM). The objective and procedural rationalities can be related to two types of decision models i.e. normative models (prescriptive) and descriptive models. Normative models (as in MODM) indicate how to make a class of decisions (example engineering and economic criterion for selection among alternatives are handled through optimization). Decision makers seek to maximize profit or utility and are infinitely sensitive to differences among outcomes. On the other hand, descriptive models (as in MADM) indicates how decision maker actually makes decision, through a limited search for a few satisfactory alternatives which satisfies decision makers aspiration level (satisfice). This article essentially focus on such satisficing concerns and thus deals with MADM methods 6. Decision-making is a process, involving a sequence of activities that starts with recognition of a decision problem and ends with recommendation for a decision.The quality of the decision depends on the sequence and quality of activities that are carried out. Depending on the situation, there are a number of ways that the sequence of activities can be organized. According to Keeney (1992), two major approaches can be distinguished, the alternative-focused, and the valuefocused approach.The alternativefocused approach starts with development of alternative options, specification of values and criteria, then evaluation and recommendation of an option.
5. Failing to differentiate such understanding will result in users applying MCDM within a cookbook paradigm. Relevant expert knowledge in translating such criterion thresholds into a value function curve is a requirement. 6. For a related descriptive theory, see “Prospect Theory� (1979) concerning decisions under risk. It explains how and why our choices deviate from the normative model of expected-utility theory.
ISSUE 01 / VOL. 02 / JUNE. 2004
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