Cumulative dominance and heuristic performance in binary multi-attribute choice
AbstractSeveral studies have reported high performance of simple decision heuristics multi-attribute decision making. In this paper, we focus on situations where attributes are binary and analyze the performance of Deterministic-Elimination-By-Aspects (DEBA) and similar decision heuristics. We consider non-increasing weights and two probabilistic models for the attribute values: one where attribute values are independent Bernoulli randomvariables; the other one where they are binary random variables with inter-attribute positive correlations. Using these models, we show that good performance of DEBA is explained by the presence of cumulative as opposed to simple dominance. We therefore introduce the concepts of cumulative dominance compliance and fully cumulative dominance compliance and show that DEBA satisfies those properties. We derive a lower bound with which cumulative dominance compliant heuristics will choose a best alternative and show that, even with many attributes, this is not small. We also derive an upper bound for the expected loss of fully cumulative compliance heuristics and show that this is moderate even when the number of attributes is large. Both bounds are independent of the values of the weights.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 895.
Date of creation: Sep 2005
Date of revision:
Contact details of provider:
Web page: http://www.econ.upf.edu/
Multi-attribute decision making; binary attributes; DEBA; cumulative dominance; performance bounds; Leex;
Other versions of this item:
- Baucells Alibés Manel & Carrasco López Juan Antonio, 2006. "Cumulative Dominance and Heuristic Performance in Binary Multi - Attribute Choice," Working Papers 201047, Fundacion BBVA / BBVA Foundation.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- M10 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-15 (All new papers)
- NEP-DCM-2005-10-15 (Discrete Choice Models)
- NEP-MIC-2005-10-15 (Microeconomics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Robin Hogarth & Natalia Karelaia, 2006. "On heuristic and linear models of judgment: Mapping the demand for knowledge," Economics Working Papers 974, Department of Economics and Business, Universitat Pompeu Fabra.
- Clintin Davis-Stober, 2011. "A Geometric Analysis of When Fixed Weighting Schemes Will Outperform Ordinary Least Squares," Psychometrika, Springer, vol. 76(4), pages 650-669, October.
- Robin Hogarth & Natalia Karelaia, 2005. "Regions of Rationality: Maps for bounded agents," Working Papers 269, Barcelona Graduate School of Economics.
- Berg, Nathan, 2010.
"Success from Satisficing and Imitation: Entrepreneurs’ Location Choice and Implications of Heuristics for Local Economic Development,"
26594, University Library of Munich, Germany.
- Berg, Nathan, 2014. "Success from satisficing and imitation: Entrepreneurs' location choice and implications of heuristics for local economic development," Journal of Business Research, Elsevier, vol. 67(8), pages 1700-1709.
- Berg, Nathan & Biele, Guido & Gigerenzer, Gerd, 2010.
"Does Consistency Predict Accuracy of Beliefs?: Economists Surveyed About PSA,"
24976, University Library of Munich, Germany.
- Berg, Nathan & Biele, Guido & Gigerenzer, Gerd, 2010. "Does consistency predict accuracy of beliefs?: Economists surveyed about PSA," MPRA Paper 26590, University Library of Munich, Germany.
- Nathan Berg & G. Biele & Gerd Gigerenzer, 2013. "Does Consistency Predict Accuracy of Beliefs?: Economists Surveyed About PSA," Working Papers 1308, University of Otago, Department of Economics, revised Apr 2013.
- Konstantinos V. Katsikopoulos, 2009. "Coherence and correspondence in engineering design: informing the conversation and connecting with judgment and decision-making research," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(2), pages 147-153, March.
- Robin Hogarth & Natalia Karelaia, 2005. "Regions of rationality: Maps for bounded agents," Economics Working Papers 828, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2006.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.