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Cumulative Dominance and Heuristic Performance in Binary Multi - Attribute Choice

Manel Baucells () and Juan Antonio Carrasco López ()
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No 201047, Working Papers from Fundacion BBVA / BBVA Foundation

Abstract: Several studies have reported high performance of simple decision heuristics in multi-attribute decision making. In this working paper, we focus on situations where attributes are binary and analyze the performance of Deterministic-Elimination-By-Aspects (DEBA) and similar decision heuristics. We considernon-increasing weights and two probabilistic models for the attribute values: one where attribute values are independent Bernoulli random variables; 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. Wether efore 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.

Keywords: Multi-attribute decision making; binary attributes; DEBA; cumulative dominance; performance bounds. (search for similar items in EconPapers)
Pages: 47
Date: 2006-10
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Journal Article: Cumulative Dominance and Heuristic Performance in Binary Multiattribute Choice (2008) Downloads
Working Paper: Cumulative dominance and heuristic performance in binary multi-attribute choice (2005) Downloads
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