A Bayesian model for multicriteria sorting problems

Canan Ulu and Thomas S. Shively

IISE Transactions, 2024, vol. 56, issue 7, 777-791

Abstract: Decision makers are often interested in assigning alternatives to preference classes under multiple criteria instead of choosing the best alternative or ranking all the alternatives. Firms need to categorize suppliers based on performance, credit agencies need to classify customers according to their risks, and graduate programs need to decide who to admit. In this article, we develop an interactive Bayesian algorithm to aid a decision maker (DM) with a multicriteria sorting problem by learning about her preferences and using that knowledge to sort alternatives. We assume the DM has a linear value function and value thresholds for preference classes. Our method specifies an informative prior distribution on the uncertain parameters. At each stage of the process, we compare the expected cost of stopping with the expected cost of continuing to consult the DM. If it is optimal to continue, we select an alternative to present to the DM and, given the DM’s response, we update the prior distribution using Bayes’ Theorem. The goal of the algorithm is to minimize expected total cost. We develop lower bounds on the optimal cost and study the performance of a heuristic policy that presents the DM alternatives with the highest expected cost of misplacement.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/24725854.2023.2243615 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:uiiexx:v:56:y:2024:i:7:p:777-791

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/uiie20

DOI: 10.1080/24725854.2023.2243615

Access Statistics for this article

IISE Transactions is currently edited by Jianjun Shi

More articles in IISE Transactions from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().