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How to Influence the Results of MCDM?—Evidence of the Impact of Cognitive Biases

Author

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  • Gerda Ana Melnik-Leroy

    (Institute of Data Science and Digital Technologies, Vilnius University, Akademijos str. 4, LT-08412 Vilnius, Lithuania)

  • Gintautas Dzemyda

    (Institute of Data Science and Digital Technologies, Vilnius University, Akademijos str. 4, LT-08412 Vilnius, Lithuania)

Abstract

Multi-criteria decision-making (MCDM) methods aim at dealing with certain limitations of human information processing. However, cognitive biases, which are discrepancies of human behavior from the behavior of perfectly rational agents, might persist even when MCDM methods are used. In this article, we focus on two among the most common biases—framing and loss aversion. We test whether these cognitive biases can influence in a predictable way both the criteria weights elicited using the Analytic Hierarchy Process (AHP) and the final ranking of alternatives obtained with the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS). In a controlled experiment we presented two groups of participants with a multi-criteria problem and found that people make different decisions when presented with different but objectively equivalent descriptions (i.e., frames) of the same criteria. Specifically, the results show that framing and loss aversion influenced the responses of decision makers during pairwise comparisons, which in turn caused the rank reversal of criteria weights across groups and resulted in the choice of a different best alternative. We discuss our findings in light of Prospect Theory and show that the particular framing of criteria can influence the outcomes of MCDM in a predictable way. We outline implications for MCDM methodology and highlight possible debiasing techniques.

Suggested Citation

  • Gerda Ana Melnik-Leroy & Gintautas Dzemyda, 2021. "How to Influence the Results of MCDM?—Evidence of the Impact of Cognitive Biases," Mathematics, MDPI, vol. 9(2), pages 1-25, January.
  • Handle: RePEc:gam:jmathe:v:9:y:2021:i:2:p:121-:d:476315
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    2. Betul Yagmahan & Hilal Yılmaz, 2023. "An integrated ranking approach based on group multi-criteria decision making and sensitivity analysis to evaluate charging stations under sustainability," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(1), pages 96-121, January.

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