Hi. In this lecture we're going to talk
about a type of decision making known as
multi-criterion decision making. And the
idea here is that there's lots of
different dimensions and you've got a
couple choices, and you're trying to
figure out which choice, you know, sort of
makes you happy, which choice you think is
sort of the better of the two or three or
four, right? So how does this work? We're
going to do this in two ways, we're going
to do first, do it qualitatively. And then
we'll do it quantitatively. So, let's do a
qualitative assessment first. By that I
just mean just sort of no numbers, right?
It just means sort of like, which is
better? Lets suppose you're looking at a
house. [laugh] This is a very small house,
but let's suppose you're looking at a
house, and you're trying to decide, you
know, should I buy this house, or there's
some other house down the street and I'm
also looking at that. Now, if you think
about making that sort of decision, a
house has all sorts of dimensions to it,
right? So there's square feet, there's the
number of bedrooms, there's number of
bathrooms, there's the lot size. There's
the location. There's the condition of the
house. There's all these things. So, If
you sit there and you go through one house
and you go through the other house and you
try to keep all these things in your head,
that can be really, really complicated. So
one way to do multi-criterion decision
making is just to say okay let's just
create a chart like this. Let's create the
following model where these are the
dimensions right here. These are all the
dimensions I'm gonna decide on. And then
for each house, right, house one and house
two, I have a column. So now, what I can
do is I can write down the square footage
of these houses. So I could say this house
is maybe 2,000 square feet and this house
is 1,800 square feet. Right? And number of
bedrooms. I could say maybe this house has
four bedrooms and this house has three
bed, bedrooms. So, house one is sort of
bigger with more bedrooms, but house one
may only have one one-half bathrooms where
as house three, house two has three
bathrooms. Now look at the lot size. It
may be this one is only a quarter acre.
And this one is a half acre. Right? And
then I look at the location, and the
location, now this, maybe, maybe I put
miles from work. Maybe this is ten miles
from work, and maybe this is fifteen miles
from work. And the last I can ask okay
what's the condition of the house? And
maybe this one. Is excellent, and this one
is only good. What I would like
[inaudible] these criteria and say, okay,
which one wins, right? So, what I can do
is I can say, okay, well, on square
footage this one wins, on bedrooms this
one wins, on bathrooms house two wins, on
lot size house two wins, on location, cuz
this is distance to work, house one wins,
and on condition of the house, house one
wins. So what I get is that house one gets
a total of four, and house two gets a
total of two, [cough] so if I can deduce
anything and say, well look, house one
seems like a better house, right? Because
it, it wins on four of the six criteria.
And this is a way, you know, one way to
make decisions. You can do this on other
issues as well. A few years ago the state
of Michigan had a referendum called the
Michigan Civil Rights Initiative, and this
essentially, was a referendum saying that
state employees, you know, state employers
including universities could not give
preferential treatment to women or
under-represented minorities. So what I
did with Liz Suhey, who was a grad student
at the time at the University of Michigan,
was we put together a, a decision theory
guide for people to help make this
decision. So what we did, is for each of
the different dimensions of this issue,
how it was going to affect things like.
Equality, the quality of education, help
or harm women, social cohesion, reward
merit and whether it was an appropriate
limit or not. We wrote a guide that sort
of laid out. The argument for mcri and
against the mcri. And then what a person
could do is they could go down each of
these dimensions and say I'm in favor of
the mcri or I'm against it, right, and so
on and then count up the columns and say
okay there's four reasons why I should
support it, and two reasons why I should
be against it, where alternatively someone
might read through these things and say
well on every one of these dimensions I
think we should reject the mcri and vote
against it. So what this was, is this was
a guide to help people recognize the
dimensions, weight the alternatives along
those two dimensions, and then make
hopefully more informed choices. So if you
think about how you vote or how you buy a
house, this can be really a useful way,
because there are so many dimensions,
right? What you do is just lay out each
dimension. Put columns for the
alternatives, and then decide which
alternative is better on which dimension,
and then add those up and make a choice.
So let's go back to our house case. So I
do this, I put down all the criteria, and
I, you know, list house one and house two,
and then it says, okay, you know, I should
buy, if you're doing this, right, remember
we came down and we had four reasons why I
should buy house one and two reasons why I
should buy house two, and I say, okay,
therefore I'm buying house one. Suppose I
do that and I don't like house one
[laugh]. I've done different houses and I,
in my gut, I say you know what, I don't
like house one. I really like house two.
Well it's a couple things going on. One is
maybe I'm missing some criteria. Maybe
house two is a Spanish style house and
house one is a Craftsman house and what I
really like is Spanish style houses. Well,
if that's the case, right? What I should
do is go back to my criteria and add
Spanish style house. But if I do that,
that's still only going to make it four to
three. Well, what can I do then? Well, one
thing I can do then is I could say, well,
do I really like house two? [laugh] Right,
is it really the case I like two or is
there, is there something [inaudible]
irrational in what I'm doing? Is this, is
it some sort of romantic attachment to
house two, when in fact, when I look at it
somewhat objectively according to the
criteria that I care about, house one is
better? Well, another way we can go, more
sophisticated multi-criterion
decision-making model, is to take into
account quantitative weights, right, to
not only just take into account
qualitatively which is better, but
actually quantitatively, to measure the
differences. So what do I mean? So now I
can say okay, here's all these things I
care about, right? And let's suppose now
that I've added in here that I also care
about the basement. So now, there's house
one and house two and maybe again house
one wins on square feet, number of
bedrooms but it doesn't win on bathrooms
or lot size and it wins on lot location
and condition, but suppose house two wins
on basement, right? And before I had this
total of. Four to three. But it could be
that you know, square footage doesn't
matter to me that much. Nor does number of
bedrooms so go, give each of these one.
But number of bathrooms matters to me two.
And lot size matters to me too. Location
and condition don't matter to me very
much, and having a basement is incredibly
important. Well now. If I do this, house
one gets a total of one, two, three, four.
Right? And house two gets a total of two,
four, six. And so now, it's house two. And
so what I see is, okay, what really was
going on here is that when I put in how
much I care about these dimensions, I
realize that's the reason why in my gut, I
sort of felt that house two was better.
Now again, let's think about this one.
Remember we talked about, we don't want to
let the models tell us what to do. We want
the models to help us make better choices.
So if I'm buying a house and I write down
all the criteria, and I compare two
houses. And I see boy, [laugh], according
to my very, my own criteria, house one is
better than house two, but in my heart of
hearts, I prefer house two. That doesn't
mean we shouldn't buy house two. But it
does mean we should ask ourselves are
there, are there criteria we're leaving
out, or other weights? So we can at least
understand ourselves and know why we're
making the choice. And that, no we're not
making it because you know, perhaps we
liked. The blue curtains in the living
room or something, right? So, it helps us
make more rational choice. So, that's sort
of normatively why these things are so
useful. Positive way too, because when you
see somebody else buy a house. When you
see, boy house one was better on every
dimension except for lot size. We can then
infer, well, this is someone who cares a
lot about lot size. Okay. There we go. So
that's it. Multi-criterion decision
making. What you do is you list all your
criteria, take your alternatives and you
see which one wins in each, on each
criteria. Now you can also add weight to
make it more quantitative so some criteria
matter more than others. Again, two ways
we can use it. One is make better choices
ourselves, right? We just saw how when
we're make, deciding like whether to buy a
house or how to vote this can be real
useful, and second we can use them to
understand the choices of others. Thank