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Cumulative dominance and heuristic performance in binary multi-attribute choice

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  • Manel Baucells
  • Juan A. Carrasco
  • Robin Hogarth

    ()

Abstract

Several 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.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 895.

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Date of creation: Sep 2005
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Handle: RePEc:upf:upfgen:895

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Web page: http://www.econ.upf.edu/

Related research

Keywords: Multi-attribute decision making; binary attributes; DEBA; cumulative dominance; performance bounds; Leex;

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Cited by:
  1. Berg, Nathan & Biele, Guido & Gigerenzer, Gerd, 2010. "Does Consistency Predict Accuracy of Beliefs?: Economists Surveyed About PSA," MPRA Paper 24976, University Library of Munich, Germany.
  2. Berg, Nathan, 2010. "Success from Satisficing and Imitation: Entrepreneurs’ Location Choice and Implications of Heuristics for Local Economic Development," MPRA Paper 26594, University Library of Munich, Germany.
  3. 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.
  4. 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.
  5. 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.
  6. Robin Hogarth & Natalia Karelaia, 2005. "Regions of Rationality: Maps for bounded agents," Working Papers 269, Barcelona Graduate School of Economics.
  7. 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.

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