Decision-making under uncertainty – the integrated approach of the AHP and Bayesian analysis

Predrag Mimović, Jelena Stanković and Vesna Janković Milić

Economic Research-Ekonomska Istraživanja, 2015, vol. 28, issue 1, 868-878

Abstract: In situations where it is necessary to perform a large number of experiments in order to collect adequate statistical data which require expert analysis and assessment, there is a need to define a model that will include and coordinate statistical data and experts’ opinions. This article points out the new integrated application of the Analytic Hierarchy Process (AHP) and Bayesian analysis, in the sense that the Bayes’ formula can improve the accuracy of input data for the Analytical Hierarchy Process, and vice versa, AHP can provide objectified inputs for the Bayesian formula in situations where the statistical estimates of probability are not possible. In this sense, the AHP can be considered as the Bayesian process that allows decision-makers to objectify their decisions and formalise the decision process through pairwise comparison of elements.

Date: 2015
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DOI: 10.1080/1331677X.2015.1092309

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