Cost management with default risk in large-scale group decision making: A method based on cooperative bargaining game

Yulong Li, Zhuang Wang, Yinghua Shen and Witold Pedrycz

European Journal of Operational Research, 2026, vol. 329, issue 2, 556-576

Abstract: The collective ranking of alternatives with high consensus is the core and ultimate goal of large-scale group decision making (LSGDM). However, the involvement of a large number of decision makers (DMs) with diverse status or expertise poses challenges for cost management. Fair and rational analysis of cost management considering default risk is necessary but lacking in the current LSGDM research. We view the consensus reaching process (CRP) as a bargaining process where subgroup spokesmen (SSs) will compensate the decision-modification costs of DMs. Based on cooperative bargaining, a novel cost management method for LSGDM considering default risk is developed in this paper. First, we define alternative ranking models for DMs and introduce two modes for adjusting the ranking of alternatives according to high and low default risk, respectively. Then, a series of cost management models is developed to determine the upper and lower bounds of DM’s compensation cost under these two risk scenarios. Subsequently, based on the Kalai-Smorodinsky bargaining solution, we analyze the bargaining power of SSs and DMs in the CRP process and highlight the managerial implications. We find that the bargaining power of DMs and SSs stems from their possession of "resources" that the other needs, either to confer benefits or to inflict costs. The fair and rational compensation cost considering default risk are then determined. Finally, we demonstrate the effectiveness and applicability of the cost management method through the comprehensive experimental study. The results indicate that a small amount of compensation for default risk, combined with the fair and rational analysis considering the bargaining power of DMs and SSs, can significantly control DMs’ default risk below the specified threshold. Our method not only theoretically contributes to the cost management research, but also provides managerial insights for LSGDM organizers to determine fair and rational compensation scheme considering default risk of DMs.

Keywords: Cost management; Bargaining game; Default risk; Alternative-ranking based approach; Discrete choice model (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:329:y:2026:i:2:p:556-576

DOI: 10.1016/j.ejor.2025.07.047

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