Paper #895

Title:

Cumulative dominance and heuristic performance in binary multi-attribute choice

Authors:

Manel Baucells, Juan A. Carrasco and Robin Hogarth

Date:

September 2005

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.

Keywords:

Multi-attribute decision making, binary attributes, DEBA, cumulative dominance, performance bounds, Leex

JEL codes:

D81, M10

Area of Research:

Management and Organization Studies

Published in:

Operations Research, 56 (5), 1289-1304, 2008

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