The analytic hierarchy process (AHP) is flawed as a procedure for ranking alternatives in that the rankings produced by this procedure are arbitrary. This paper provides a brief review of several areas of operational difficulty with the AHP, and then focuses on the arbitrary rankings that occur when the principle of hierarchic composition is assumed. This principle requires that the weights on the higher levels of a hierarchy can be determined independently of the weights on the lower levels. Virtually all of the published examples of the use of the AHP to evaluate alternatives relative to a set of criteria have assumed this principle. The key to correcting this flaw is the synthesis of the AHP with the concepts of multiattribute utility theory.decision analysis, multiattribute utility theory, analytic hierarchy process

This article is an update of an article five of us published in 1992. The areas of Multiple Criteria Decision Making (MCDM) and Multiattribute Utility Theory (MAUT) continue to be active areas of management science research and application. This paper extends the history of these areas and discusses topics we believe to be important for the future of these fields.

This paper presents a theory of measurable multiattribute value functions. Measurable value functions are based on the concept of a “preference difference” between alternatives and provide an interval scale of measurement for preferences under certainty. We present conditions for additive, multiplicative, and more complex forms of the measurable multiattribute value function. This development provides a link between the additive value function and multiattribute utility theory.

In this paper we show that performance information about “forgone” alternatives (i.e., alternative that were considered but not chosen) can have a significant impact on post-choice valuation. Our approach introduces a new and parsimonious way of looking at satisfaction that combines the literature on post-choice valuation with research regarding generalized expected utility theory. While the post-valuation literature focuses on the selected brand as the valuation's basis (e.g., Anderson and Sullivan [Anderson, E. W., M. W. Sullivan. 1993. The antecedents and consequences of customer satisfaction for firms. (Spring) 125–143.], Bolton and Drew [Bolton, R., J. Drew. 1991. A multistage model of customers' assessments of service quality and value. 375–384.]), we draw on a stream of research in generalized expected utility theory that considers both chosen and forgone alternatives as the basis for valuation (e.g., Bell [Bell, D. 1983. Risk premiums for decision regret. 1156–1166 and Bell, D. 1985. Disappointment in decision making under uncertainty. 1–27.]; Loomes and Sugden [Loomes, G., R. Sugden. 1982. Regret theory: An alternative theory of rational choice under uncertainty. 805–824 and Loomes, G., R. Sugden. 1986. Disappointment and dynamic consistency in choice under uncertainty. 271–282.]). The result is a combined model of post-choice valuation that explicitly incorporates both concepts. Specifically, we extend the existing paradigm of post-choice valuation to include buyers' regret concerning forgone alternatives, proposing a generalized utility theory-based treatment of post-choice product assessment that uses the intuitively appealing concepts of disappointment and regret as the basis. We propose a model for conceptualizing post-choice valuation that is consistent with the existing literature, discuss how this model extends the construct to consider the influence of forgone alternatives, and report results of an empirical test that contrasts our model to important recent work in the area (e.g., Boulding et al. [Boulding, W., A. Kalra, R. Staelin, V. A. Zeithaml. 1993. A dynamic process model of service quality: From expectations to behavioral intentions. (February) 7–27.]). Our generalized model of post-choice valuation is based on the sum of three components that represent factors that may contribute to consumers' assessment of a chosen product or service. The first component is expected performance. The second component is disappointment, which captures the discrepancy between actual and expected performance (much as the disconfirmation construct in traditional satisfaction research). The third component is regret, which captures the difference between the performance of the chosen product/service and the performance of a forgone product/service. This perspective is useful in that risk is captured by the disappointment and regret terms, providing an intuitively appealing decomposition of post-choice valuation and offering several advances over previous representations of disappointment and regret. We test o...

An interactive mathematical programming approach to multi-criterion optimization is developed, and then illustrated by an application to the aggregated operating problem of an academic department.

Management science and decision science have grown exponentially since midcentury. Two closely-related fields central to this growth are multiple criteria decision making (MCDM) and multiattribute utility theory (MAUT). This paper comments on the history of MCDM and MAUT and discusses topics we believe are important in their continued development and usefulness to management science over the next decade. Our aim is to identify exciting directions and promising areas for future research.decision making, multiattribute, multiple criteria

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An individual's preference for risky alternatives is influenced by the strength of preference he feels for the consequences and his attitude toward risk taking. Conventional measures of risk attitude confound these two factors. In this paper we formally separate these factors and explore how this separation might significantly enhance our understanding of decision making under risk. We introduce a new measure of risk attitude defined relative to strength of preference. This measure is based on comparing an individual's von Neumann-Morgenstern utility function to his strength of preference function. The properties of this measure of relative risk attitude are developed. The concept of relative risk attitude has several important implications. First, it provides a better description of an individual's attitude toward risk. Second, it provides a better way to combine preferences of various experts in the context of multicriteria decision making. Finally, it provides a better insight into the implications of some commonly employed preference aggregation rules in group decision making.utility/preference: theory