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(Vol. 115: Lecture Notes in Operations Research and Mathematical Economics, Vol. 1659: Lecture
Notes in Operations Research and Mathematical Systems)
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155
Edited by S. Zionts
SpringerVerlag
Berlin Heidelberg New York 1978
Editorial Board
H. Albach A. V. Balakrishnan M. Beckmann (Managing Editor)
P. Dhrymes J. Green W. Hildenbrand W. Krelle
H. P. Kunzi (Managing Editor) K. Ritter R. Sato H. Schelbert
P. Schonfeld
Managing Editors
Prof. Dr. M. Beckmann Prof. Dr. H. P. Kunzi
Brown University Universitat Zurich
Providence, RI 02912/USA 8090 ZUrich/Schweiz
Editor
Professor Stanley Zionts
State University of New York at Buffalo
School of Management
Buffalo, N. Y. 14214/USA
Sponsored by:
The European Institute for Advanced
Studies in Management, Brussels
The Office of Naval Research, and
The School of Management
State University of New York at Buffalo
This work is subject to copyright. All rights are reserved, whether the whole
or part of the material is concerned, specifically those of translation, re
printing, reuse of illustrations, broadcasting, reproduction by photocopying
machine or similar means, and storage in data banks. Under § 54 of the
German Copyright Law where copies are made for other than private use,
a fee is payable to the publisher, the amount of the fee to be determined by
agreement with the publisher.
© by SpringerVerlag Berlin Heidelberg 1978
2142/3140543210
PREFACE
The objective of this conference was to foster a healthy exchange
of ideas and experience in the domain of multiple criteria problem
solving. This conference was an outgrowth of an earlier conference
I organized with Herve Thiriez at CESA, JouyenJosas, France in 1975
during my stay at the European Institute in Brussels. When I re
joined the State University of New York at Buffalo that year, I be
gan to search for potential sponsors for this conference. Approxi
mately one year later when the prospects began to look promising, I
contacted several individuals to act as an informal coordinating
committee for the conference. I wanted to avoid biasing the con
ference completely to my way of thinking! The members of this
committee were Jim Dyer, Peter Fishburn, Ralph Kee.ney, Bernard Roy
(Universite de Paris IX Dauphine who was unable to participate in
the conference), and Milan Zeleny. Though the committee did not
meet, per se, their inputs regarding format, possible participants,
number of participants, length of the conference, and so on were of
great value to me in planning and organizing the conference. I wish
to acknowledge the contributions of this group.
We were most fortunate in obtaining the financial support of
the European Institute for Advanced Studies in Management, Brussels
·(one of the sponsors of the JouyenJosas conference), the Office
of Naval Research, and the State University of New York at Buffalo.
In addition we were fortunate to have the participation of Neal
Glassman and Randy Simpson,two individuals from the Office of Naval
Research, at the conference. Their presence enhanced the conference.
In addition to expressing my appreciation to all the participants
for their enthusiastic activity in and support of the conference,
I especially want to thank the speakers, session chairmen, and dis
cussants. I also thank Mr. Nelson K. Upton, Administrator, Continu
ing Education for Management the School of Management of the State
University of New York at Buffalo, and Mrs. Marcia Livent and Mr.
Dennis Dracup of his office. They very capably handled numerous
details of the conference organization. Mrs. Marie Huber, my
secretary, handled in a cheerful and efficient manner many of the
problems and frustrations that arose. In addition to the help of
some of the participants who provided local transportation for
conference participants, I thank my wife, Terri, for pitching in
with whatever had to be done and helping to make the conference
run so smoothly.
Stanley Zionts
Buffalo, New York
November, 1977
Conclusion to the Conference
by Tomas Gal
The chairman of the last session, ~rofessor E. Johnsen, has asked
me to say a few words to close the conference. I am honored and will
try to do my best.
"Nothing is perfect" said some of the great ancient Greeks. So
it is with this conference. At the very beginning there arose some
difficulties with the Ellicott complex. The first morning the chair
man and a group of participants were on the second floor of a building
trying staircases, locked doors, elevators and all possible (3dimen
sional) directions in order to find the conference room. Since the
problem of getting lost in the Ellicott complex remained, somebody
proposed the following: Let a beginning student at the university find
his way through the complex. Since this will take at least 4 years, he
may pass his exams by showing the way through the complex to partici
pants of various conferences held at Ellicott and thereby obtain his
degree. A participant trying to find his way and asking somebody
where he is, could get the answer as it was published in a cartoon in
"The New Yorker" September 5, 1977 (p. 24). (Nowhere!)
Some of the participants were afraid that there would be problems
in finding something to do during the evenings. However, it turned
out that the program schedule was sufficiently tight that many
participants were falling asleep on t~e way to their rooms, and those
with a higher energy level, always found an opportunity to go some
where to drink and socialize.
Somehow or other most of the participants (including the session
chairmen) showed up redeyed and a little late for the first sessions
in the morningl
On the other hand, the sessions were very interesting and the
participants actively participated and enjoyed the conference. Except
for the slow starts in the morning, attendance at all sessions,
including Tuesday evening, was high.
The participants were a group of well known and highly
talented professionals who have the common goal of studying Multiple
Criterion Problems (MCP) with others. Some of them approach MCP
from the viewpoint of mathematical programming, others from the
utility theory viewpoint or decision theory viewpoint, and still
others from the psychological viewpoint. Last but not least, there
are a few courageous souls whom we all admire (as Jim Dyer said) who
deal with real applications in various fields. I dare say that we
have all learned a lot, not only in our own field of interest, but 
and this is encouraging  we became acquainted with new viewpoints and
new approaches. This has been only one of many advantages of the
conference!
As I mentioned before and as we all know, the program was quite
full. In spite of this, the director of the conference, Stan Zionts,
was able to arrange mindrelaxing activities such as an outing to
Niagara Falls. He solved the problems of transportation as well as
other problems which were not his responsibility.
All participants were highly satisfied with the scientific gain
of the conference and also  as it turned out  with its organization
(Note that Stan does not have an Ellicott Complex!).
Some of us had already met in JouyenJosas and now we have be
come acquainted with other interesting and pleasant people. This
is another of the positive results of the conference!
Hence, the conference was a success, not only for all participants
and speakers, but also for Professor Stanley Zionts who surely worked
hard and spent a lot of time in preparation. What I would like to
say in a highly sophisticated English (which I am unfortunately not
able to do) is to express our gratitude in the name of all
participants. We very much appreciate the work and time Stan in
vested in this successful and pleasant conference.
TABLE OF CONTENTS*
PAGE
BELL, DAVID E.
"Interpolation Independence" • • • • • • 1
BLIN, JEANMARIE and J.A. DODSON, JR.
"A Multiple Criteria Decision Model for
Repeated Choice Situations" • • • • • • 8
BODILY, SAMUEL
"Evaluating Joint LifeSaving Activities under Uncertainty". 23
CHANKONG, VIRA and YACOV Y. HAIMES
"The Interactive Surrogate Worth Tradeoff Method
for Mu1tiobjective DecisionMaking" • • • • • • • • 42
DYER, JAMES S. and RAKESH K. SARIN
"Cardinal Preference AggregationRu1es for the
Case of Certainty" • • • • • • • • • • • • • • • 68
EINHORN, HILLEL and WILLIAM MCCOACH
"A Simple MultiAttribute Utility Procedure for
Evaluation ". . . . . . . . . . . . . . . . 87
FANDEL, GONTER
"Public Investment Decision Making with Multiple
Criteria1 An Example of University Planning" •• 116
FARQUHAR, PETER H.
"Interdependent Criteria in Utility Analysis" • • • • • • • • 131
FISHBURN, PETER C.
"A Survey of Mu1tiattribute/Mu1ticriterion Evaluation
Theories". . . • • . • • . . . . . . • . . . . . . . . •. 181
GAL, TOMAS
"An Overview of Recent Results in Multiple Criteria
Problem Solving as Developed in Aachen, Germany" • • 225
HANSEN, PIERRE and MICHEL DELATTRE
"Bicriterion Cluster Analysis as an Exploration Tool". 249
ISERMANN, HEINZ
"Duality in Multiple Objective Linear Programming" • • • • • 274
JOHNSEN, ERIK
"Mu1tiobjective Management of the small firm" . • • • • • • • 286
KEEFER, DONALD L.
"Applying Mu1tiobjective Decision Analysis to
Resource Allocation Planning Problems" •• •• • • • • • 299
KEENEY, RALPH L. and GARY L. LILIEN
"A Utility Model for Product Positioning" • • • • • • • • • • 321
PAGE
KIRKWOOD, CRAIG
"Social Decision Analysis Using Multiattribute
Utility Theory" • • • • • • • • • • • • • • • • • • • 335
KORNBLUTH, JONATHAN
"Ranking with Multiple Objectives" • • • • • • • • • • • • 345
LEE, SANG M.
"Interactive Integer Goal Progranuning:
Methods and Application" • • • • • . • • . • • • • • • • • 362
MORSE, JOEL N.
"A Theory of Naive Weights" • • • • • • . . • • • • • • • • 384
MOSCAROLA, J.
"Multicriteria Decision Aid
Two Applications in Education Management" • • • • • . • 402
MOSKOWITZ, HERBERT, STEVE M. BAJGIER, AARON BARTELL, and ANDREW B.
WHINSTON
"Multiattribute Risk/Benefit Analysis of Citizen Attitudes
Toward Societal Issues Involving Technology" 424
PASSY, URY and Y. LEVANON
"Condensing Multiple Criteria" • • • . • . • • • • • • . • 449
STEUER, RALPH E.
"vector Maximum Gradient Cone Contraction Techniques" • • • 462
TELL, BERTIL
"An Approach to Solving MultiPerson Multiple
Criteria DeCisionMaking Problems" 482
WEHRUNG, D.A., J.F. BASSLER, K.R. MACCRIMMON, and W.T. STANBURY
"Multiple Criteria Dominance Models:
An Empirical Study of Investment Preferences" • • • • • • • 494
YU, POLUNG
"Toward Second Order Game Problems:
Decision Dynamics in Gaming Phenomena" • . . • • • • • . • 509
ZELENY, MILAN
"Multidimensional Measure of Risk: Prospect Rating
Vector" • • • • • • ••• 529
ZIONTS,STANLEY and DILIP DESHPANDE
"A Time Sharing Computer Progranuning Application of
A Multiple Cr~teria Decision Method to Energy Planning
A Progress Report" 549
CONFERENCE PROGRAM • 561
LIST OF PARTICIPANTS • 566
INTERPOLATION INDEPENDENCE
David E. Bell
Harvard Business School
Boston, Mass. 02163
ABSTRACT
The purpose of the paper is to describe the decompositions of
multiattribute cardinal utility functions which result from assumptions
based on "interpolation independence." The decompositions involve only
single attribute marginal utility functions, together with constants,
and are stronger than other decompositions of this type. Proofs are
not given but may be obtained from references.
INTRODUCTION
In order to assess multiattribute cardinal utility functions with a
decision maker who has limited time and patience it is essential that
some good approximation be found that involves only a modest amount of
questioning of the decision maker and yet makes him feel that the re
sulting approximation is reliable. Keeney, in particular, has found
that utility independence and preferential independence are properties
which can often be shown to hold between attributes for a decision
maker, or that they hold sufficiently well to make little difference.
Sensitivity analysis can often clear up any doubts about the decision
which is ultimately recommended. But sometimes such properties will
not hold, and perhaps the analyst or the decision maker may not know
when "close" is close enough.
There are a growing number of decompositions which reduce multi
attribute utility functions to functions of lower dimension marginal
utility functions (3  10), and this paper will exhibit another. The
assumptions are chosen with a view to being transparent to the decision
maker and hopefully more easily acceptable. The assessment effort is
little more than required by existing techniques and involves only
single attribute utility functions and constants.
2
lead to conditional functions that are close. Hence it may make sense
to choose a selection of x values, x 1 , x,
2 ... ,
x _ xi i+l
u(ylx) = I
U (y X i+ 1) + x i+l  x i u (I
Yx
i)
i+l i
x  x x  x
is accurate enough.
Suppose that, having assessed u(ylxO) and u(ylx*) and discovered
that they are not identical the decision maker is prepared to accept
the idea of defining u(ylx) in general by interpolation as follows:
u(Ylx) = >..(x)u(ylx*) + (1  >,,(x»)u(ylxO) (1.2)
then I will say that Y is interpolation independent of X. The special
case >"(x) = constant is utility independence; if X is representing many
attributes then (1.2) is an example of Kirkwood's parametric indepen
dence [91; if X and Y represent a partition of a time stream, x = (xl'
x 2 " .. , x t ), y = (x t + l ' x t + 2 ' ... , xT ) them Meyer [101 would call >..(x) a
backward state descriptor.
Y interpolation independent of X (Y II X) does not necessarily im
ply that X II Y. However for a restricted set of functions >..(x) it is
the case.
Result 1: If Y II X, then X II Y also if and only if for some value k,
[k  u(x*, yO»)u(xl yO) + (1  k)u(xly*)
>.. (x) =
u(x, y*) _ u(x, yO)
where u(xly) is the conditional utility function of X on Y.
Since a decision maker who finds (1.2) acceptable will likely also ap
prove of X II Y the corollary of Result 1 is:
Result 2: X and Yare mutually interpolation independent (X MIl Y)
if and only if
4
+ (a 12  k)u(xly*)u(ylx*)
where a O (°
u x ,y 0) , a l _ u (* x ,y *) , a 12
x ,y 0) , a 2 _ u (0 u(x*,
y*) all of which, including k, are independent constants.
The proofs derive naturally from comparison of (1.1) and (1.2) with
their symmetries. Note that special cases of (1.3) include the bi
lateral independence condition of Fishburn [5] if k = a l a 2/(a 12  a l 
a 2 ) and also his recent generalized multiplicative form r6] if k = a 12 .
One way utility independence, say X UI Y, is a special case if u(xlyo)=
u(xly*) and mutual utility independence if also u(ylxo) = u(ylx*). The
additive form rather than the multiplicative form [8] results if a l +
a 2 = a O + a 12 ·
The constants a O and a 12 may be taken to be ° and 1 respectively
and a l and a 2 may be assessed directly. The constant k must be calcu
lated indirectly by assessing a value u(x, y) and then substituting it
in (1.3) to find k. It is only indeterminable if either X UI Y or
Y UI X in which case terms in k disappear from (1.3).
Thus, interpolation independence seems to provide a straightforward
procedure for assessment. The assumptions are easy to understand and,
what may be of more importanc"e, are of a type that a numerate decision
maker can see make sense. All the refinement of other decompositions
is retained, and indeed, strictly improved, without involving any
greater degree of assessment difficulty.
2. The Multiattribute Case
There are several ways to generalize the twoattribute case to
higher dimensions. The most important property to retain is that of
requiring at most two single attribute conditional utility functions
References
[ 11 Bell, D. E., "Conditional Utility Functions," Cambridge University
Engineering Department Working Paper, June 1977.
[ 21 , "Multiattribute Utility Functions: Decompositions
Using Interpolation Independence," Manuscript, August 1977.
[ 31 , "A Utility Function for Time Streams Having Inter
period Dependencies," Operations Research, 25, 448458, 1977 .
[ 41 Farquhar, P. H., "A Fractional Hypercube Decomposition Theorem
for Multiattribute Utility Functions," Operations Research,
23, 941967, 1975.
[ 51 Fishburn, P. C., "Bernouillian Utilities for Multiple Factor
Situations" in Multiple Criteria Decision Making,
J. L. Cochrane and M. Zeleny (Eds.), University of South
Carolina Press, Columbia, S.C., 4761, 1973.
[ 61 , "Approximations of TwoAttribute Utility Functions,"
Mathematics of Operations Research, 2, 3044, 1977.
[ 71 Fishburn, P. C., and R. L. Keeney~ "Generalized Utility Indepen
dence and Some Implications," Operations Research, 928940,
1975.
[ 81 Keeney, R. L., "Multiplicative Utility Functions," Operations
Research, 22, 2234; 1974.
[ 91 Kirkwood, C. W., "Parametrically Dependent Preferences for Multi
attributed Consequences," Operations Research, 24, 92103,
1976.
[101 Meyer, R. F., "State Dependent Time Preference," Conflicting Ob
jectives, D. E. Bell, R. L. Keeney, H. Raiffa (Eds.), to be
published by John Wiley & Sons, Ltd., London, 1977.
A MULTIPLE CRITERIA DECISION
MODEL FOR REPEATED CHOICE SITUATIONS
J.M. B11n,
· *
J.A. Do dson, Jr.
*~orthwestern University,
ABSTRACT
The role of multiple attributes in consumer choice has received
much attention from marketers. This literature, however, is essenti
ally deterministic. Yet, in regard to predictive accuracy, these mod
els have not performed as well as expected. Bass, Pessemier, and Leh
mann (1972), in particular, have stressed the extent to which brand
switching is observed in individual behavior. Bass (1974) and Herni
ter (1972) have proposed a model of stochastic preference to account
for brandswitching behavior. In this paper, we relate these contri
butions to the multiattributed consumer choice models. A general frame
work of analysis is proposed to model multiattributed consumer prefer
ence. It is then shown that the origin of the brandswitching phenom
enon is to be found in the interaction of the multiplicity of evalua
tive dimensions for the choice alternatives and the consumer uncertain
ty over salient attributes and alternative performance on these attri
butes. Finally, the applicability of this methodology to other exis
ting multiattribute choice models is briefly discussed.
1. INTRODUCTION
Psychologists, marketers, political scientists, and economists
have for a long time recognized the inherent multidimensionality of a
consumption good or a social choice alternative. The mUltiplicity of
attributes has come to be considered as characteristic of most choice
situations. But recognition of the many facets of a choice object
raises some problems in trying to model the individual choice process
and in trying to predict individual choice behavior. These problems
have been most clearly identified in the area of consumer choice. How
does a consumer cope with scale heterogeneity when comparing alterna
tive brands or choice alternatives? How does he aggregate these heter
ogeneous criteria to come up with a preference ordering?
Many models have been suggested to describe this process. By
far the one which has received the most attention is the linearcompen
satory model, e.g., Fishbein (1967). Application of this model to the
prediction of brand choice would suggest that the rank order of a
9
m
s, ,=1
L ~J
i=l
(2.3) m
I
j=l
s, ,=1
~J
0 < s, , < 1
 ~J
n
(2.4) L
k=l
Any aggregation process must deal with the problem of scale
heterogeneity. To resolve it, we require only ordinal evaluations of
the brands. In processing these various attributewise preferences, we
hypothesize that the consumer follows a linear aggregation process 5
n
(2.5) S = L
k=l
In general, S is a doublystochastic matrix in~. For instance, if
B = (b l b 2b 3 ), A (a l ,a 2 ,a 3 ) and wl =w2= 1/4, w = 1/2,
3
~ ~l ~ ~ ~0 ~
0 1 0
P = 1 P = 0 0
1 0 2 0
p3 
1
(b l b 2b 3 ) (b 2b l b 3 ) (b b b )
2 3 1
(2.9) Min
P~@
U ~]
1
P* 0 i.e. b2>b 3>b l
0
and z(P * ) = 3/4 + 1/2 + 1/2 =
7/4
Geometrically, this solution can be found by projecting S orthogonally
onto
6. In view of this equivalence of solutions, the assignment formula
tion provides a convenient and welldocumented solution procedure
for implementation purposes. For a general discussion of an appli
cation of this formulation in a marketing context, see Bernardo
and Blin (1975). Furthermore, this formulation defines a special
linear assignment since the Sij' the "profit" matrix, has a speci
al structure, i.e., its rows and columns all sum to one.
7. As a 3 2=9 dimensional representation is impossible, we use this
(strictly speaking) illdimensioned figure to help understand the
rationale for the solution concept.
15
/
/
\ c ./
. /
\ .
p ** ~ _
.. ._ _. "\.'_. .. ,
..
.......... s ,. . (b b b )
/
. \
.\
l Z 3
b 3>b Z>b l
~ ~ g]
the closest (in the cityblock or Euclidean sense) face of the poly
tope ~, and repeat this procedure until we reach a face of order 0,
that is, a vertex (b Z>b 3>b l , here); or until no improvement in z can
be found, if there are several optima. In the latter case, we could
have P** ,say if b l and b 3 were tied for second place (see Figure 1).
If all three brands were tied, we would get point C in the center of
this polytope. Again, referring to Figure 1 above, we see that the
wedgeshaped portions centered at C delineate the regions of ~ which
would lead to that vertex being chosen.
16
. "blchosen"
"b 2c h } ,
osen . region
region \.
Density of S
4. CONCLUSIONS
Many explanations have been offered for the observed brand
switching which characterizes much of consumer choice. In this paper,
we propose a model which relies on weaker input data than required in
many mu1tiattributed choice models. It has also provided a vehicle
for integrating the mUltiplicity of attributes and evaluative uncer
tainty. Integration of these factors into a model of rational choice
is consistent with observed individual behavior.
20
ACKNOWLEDGMENT
Support for this research was provided by NSF Grant Eng #75
07845.
21
Samuel E. Bodily
ABSTRACT
1. Introduction
2. A Case Problem
Acton [1], JonesLee [5], and Raiffa [10] have all formulated
the WTP decision for an individual's purchase of a decrease in
the probability of death. While the formulations differ in de
tails, in each, the individual faces the decision tree in Figure 1.
Health
Status wealth
dead w*
alive w*
dead w*V
alive w*V
If the individual chooses the upper branch and does not buy
27
Result 1. (JonesLee) If
(a) L(w) > o(w) for all w
and (b) L'< 0'< 0,
then
(i) ~V> 0
ad
and (ii) a[~~J d=O >0
d P
av
ap =
0
(w*w ) (lD*)
(pd) D* + (lp+d) (lL o )
U (3)
Table 1
Resultant Forms
Outcome to Individuals
i j
s. w. s. w.
~ ~ ....1 ....1
alive w alive w
Ll
dead w dead w
alive w dead w
dead w alive w
life, w
death, w
36
Individual Surrogate
Utilities Utility
U
1 1
D* D* {(l+kcD*)N_ 1J / k
for program E, assuming the SUF has the multiplicative form scaled
so that surrogate utility is zero when all individual utilities are
zero and one when all individual utilities are one. Symmetry in
the importance weighting of individual utilities is assumed here
by replacing k i with a constant c, i=I,2, ••. ,N. Equating expected
surrogate utility for the two decision branches we obtain
5. Conclusion
References
12. Schelling, T.C., "The Life You Save May be Your Own," in
Problems of Public Expenditure, edited by S.B. Chase, Brook
ings Institution, Washington, 1968.
Vira Chankong
Mekong Secretariat/Planning Unit
National Energy Administration
Bangkok 5,Thailand
and
Yacov Y. Haimes
Professor of Systems Engineering
and Civil Engineering
CASE INSTITUTE OF TECHNOLOGY
CASE WESTERN RESERVE UNIVERSITY
ABSTRACT
under some rational and consistent choices on the part of the DM,
converges to a solution having maximum DM utility. The DManalyst
dialogue as well as the tasks to be performed by both are kept simple.
The method applies to both linear and nonlinear multiobjective de
cisionmaking problems. Other features in which the method has its
strengths and weaknesses are discussed and demonstrated by means of
a numerical example.
1. INTRODUCTION
There is a proliferation of existing techniques for solving a
multiobjective decisionmaking problem (MD~l). The emphasis and style
of each of these techniques depend largely on the field of expertise
of its developer(s). Social scientists and economists, for example,
tend to look at an MDM problem from the 'human factor' viewpoint and
concentrate mainly on the role of the decisionmaker (DM). Here all
major activities evolve around the DM's subjective value judgments
and the task of translating those judgments into some form of prefer
ence function (e.g., multiattribute utility function (see for example
[Fishburn, 1973]) or indifference function (for example [MacCrimmon
and Wehrung, 1975]), etc.). On the other hand, those who are well
equipped with mathematical tools and more familiar with 'mechanical'
systems tend to look at an MDM problem from the 'structural' view
point and try to attack it with mathematical rigor. While both may
have their own merits and may be suitable for some types of problems,
the former group is criticized as being ignorant of (physical)
details (of the problem) whereas the latter group is sometimes criti
cized for being too involved with only the physical aspects by
44
values (on an ordinal scale of (say) 10 and +10) to each variable
Wkj (the surrogate worth as it is called by Haimes and Hall).
Several favorable features of the SWT method can be identified. Some
of these are: i) the use of the constraint approach in step 1
guarantees that all noninferior solutions can, in principle, always
be generated even for nonconvex problems, ii) the proposed objec
tive tradeoffs used in step 2 are easy to obtain, informative, com
prehensible and easy for the DM to work with, and iii) it is generally
easier to assess preference on the already determined tradeoffs than
to estimate numericaly tradeoffs to satisfy some present criteria as
required by some other methods. The SWT method was extended by Hall
and Haimes 11976] to handle mUltiple DMs.
There is, however, room for some improvement, Rarticularly ihthe
way the information from the DM is utilized. In its original noninter
active version, after all Wkj are obtained from the DM, curve fitting
or multiple regression analysis is done to try to relate Wkj to trade
offs and the current levels of objectives. After this is done, a
system of equations corresponding to Wkj C·) = 0 for all j f k is
solved to find a point in the indifference band. In going through
these mechanical steps, we may be performing illegitimate mathematical
operations in the sense that the empirical information contained in
Wkj may be destroyed. Moreover, several noninferior points generally
needed to be generated to provide sufficient data for the above steps.
In this paper, an interactive version of the SWT method is pro
posed. The underlying philosophy, which is by no means new in this
rapidly growing research area, has been to develop a procedure by
which the DM and the analyst can work in close harmony during the
complex MDM process  a procedure that allows the complex details
of the internal (quantifiable) structure of the MDM problem to be
47
pertain:
Assumption 1: U:F~ R exists and is known only implicitly to
the DM. Moreover, it is assumed to be a con
tinuously differentiable and monotone nonin
creasing function on F.
Assumption 2: All fj,j = l, ... ,n and all gi = l, ... ,m are
twice continuously differentiable in their re
spective domains.
Assumption 3: X is compact (for every feasible Pk(E), as de
fined below, its solution exists and is finite).
The ISWT method, like the SWT method, is designed to solve
Problem 2. Again, the E constraint problem Pk(E), where Pk(E) is
min{fk (x) I fj (x) ~ Ej for all j t k and XEX}, is utilized as a means
of obtaining local noninferior solutions of the MOP.
The proposed method follows all the steps of the SWT method up
to the point where all the surrogate worth values (W kj for all j f k)
corresponding to a local noninferior solution are obtained from the
IM. Careful study reveals that there is a close relationship between
Wkj and the directional derivative of the utility function evaluated
at the current local noninferior solution and in the direction de
fined in terms of the associated KuhnTucker multiplier. In light of
this relation, a ''\I odelDM" interactive online scheme can be con
structed in such a way that the values of all Wkj are used to deter
mine the direction (in a reduced objective space) in which the utili
ty function, although unknown (and its true form is never required in
the computation), increases most rapidly. In this way we can con
struct a sequency of locally noninferior points, each one is an im
provement (i.e., utility value increases) over the previous one,
thereby converging to an unconstrained optimum (i.e. ends up in the
49
GUESS INITIAL EO
USE W~j TO
UPDATE Ei_Ei+l
f 3 (x)
£3 to; ........
(S) •
a > a and a
For a selected £0, let x O solve Pl(E O) with \z a
Ai 3 >
being the corresponding optimal KuhnTucker multipliers of (a) and
(S), respectively. Assuming that the regularity and secondorder
sufficiency conditions are satisfied at xC, x O is then a local non
51
°
A1Z ' it is intuitively obvious that one way to obtain an approxima
tion of such a point is to change the R.H.S. of (a) from E~ to E~ +
°
f 3 (x ), how (much) would you like to decrease fl
°
dX(EO)
by \z dE Z
units per one unit increase in £2?"
Again at the end of this questioning period, we will have the
value of W~2 representing the IM preference over the specified trade
off which can be used in the updating procedure similar to the previ
ous case.
In the above discussion, we have used the signs of W12 and W13
° °
°
(or of W12 only in the latter case) as a clue to getting a new point.
The basic question still remains as to how much E2 and E3 should be
changed to obtain the best available new point. The clue again lies
in the relative values of W~2 and W~3 (as well as the scaling factors
for fz and f 3 ). In the following development, we consider an
53
i i
arbitrary ith iteration. In the case where W12 and W13 (assume for
o 0
the moment that A12 > 0 and A13 > 0) can be measured in ratio scale
(which may be possible upon imposing some strict conventions similar
to that used by Miller [1970]), an updating scheme similar to those
i
used in mathematical programming can be developed. Suppose that W12
i are obtained through Question 1. Then Wi2 indicates the de
and W13
gree of the TIM's preference in some ratio scale between 10 and +10
i
toward exchanging (decreasing) A12 per one unit increase in f2 with
f3 remains unchanged. With this observation, it can be reasoned
(see Chankong [1977]) that there exists a monotone increasing real
valued function Y~ with Y~ (0) = 0 such that
i i
U(f l  A12 h 2 •
(1)
(2)
i aU(fl(xi),f2(xi),f3(xi)) j 1,2,3.
where ( ~¥j) ~ . :H j
where t'iE ji = Eo
J 
Eji , j = 2,3.
fur a detailed proof of (4) see Chankong [1977] • Also from the
i i _
above reference, similar result for the case where AIZ > 0 and A130
(or vice versa) can also be established.
Examination of (4) reveals that if we make the sign of OE j the
same as that of wi j j = 2,3, R.H.S. of (4) is always nonnegative in
dicating a possible increase in U. '4oreover, to find a new local
noninferior solution x i +l having the best increase in U(·) (from J)
is equivalent to finding the right values of OE 2 and OE 3 which maxi
mizes the R.H.S. of (4). By maximizing the R.H.S. of (4) with re
spect to OE Z and OE 3 subject to appropriate constraints, the follow
ing updating scheme (from Ei to Ei +l ) similar to the steepest ascent
method (or more precisely Zoutendijk's feasible direction) can be
developed (see Chankong [1977] for more details).
Case 1 If AiIZ > 0 and A13
i i+l = E~ + a i
> 0, Eo
J J
(Wi
j I fj (xi) I)
i
j = 2,3, where a is the step size to be determined.
Case 2
4. AN ILLUSTRATIVE EXAMPLE
We now demonstrate the mechanics of the ISWT method by means of
an illustrative example which is designed to test the method under
the assumption of an ideal IM (Le. consistent, rational 'With a well
defined structure of preference as represented by a utility
function). This example should also show that, barring the IM's
inconsistency, inaccuracy and irrationality, the method should per
form well in terms of convergence and other computational efficiency.
A more realistic illustration which demonstrates the learning process
of the IM and the simUlation capability provided by the ISWT method
can be found in Chankong [1977].
Consider the following multiobjective deCisionmaking problem
(MDM) :
57
subject to gl(x) xl .. 0
gz (x)  Xz .. 0
where f 1 (x) (xl _3)Z z
+ (x Z Z) , fZ (x) xl + Xz
= {I 
o
f l /30  fZ/15
if {~ :~:
, 10
, 5
otherwise 0, .. f3 , 10
(lZ)
Observe that U is a monotonic nonincreasing function of
f 1 , fZ and f3 and has [0,1] as its range.
It should be stressed that the explicit form of utility
function as in (12) is used in this example purely for simulating
the rM so that we may illustrate other aspects of the ISWT method.
Specifically it is used to simulate values of W~j (i.e. W~j obtained
this way are as if they had been obtained from the ideal (imaginary)
IM directly).
Let us now choose flex) as our primary objective and formulate
the corresponding E~constraint problem PI(E):
subject to fz(x)
58
" 0
gz (x)
z " O.  X
{ a(~2L 15
o
• ~:)l
30
otherwise (13)
and
Y~(W~3) = ciW~3/lf3(xi) 1=
Bi (2a i2  a i)Z
3 + (a 3i  a i)Z
2
a iZ c iW
iIZi fz(x i ) 1 and a 3i c iW
i i ~3 (x i ) 1 •
13
59
1 1
(xl' x 2) = (2.3,1.3), (f~, f;) (3.6,4.9), fi .98 and
1 1
\2 1.4 and A13 O.
TABLE 1
RESULTS AFTER APPLYING THE ISWT METHOD TO MOP 1
i
Posi tion .i
2
.i
3 xl Xi
2 ).~2 ).~3 ciW~21 f2 (Xi) Ui
X2
2.0
1.0
,,"
,,"" E2=3,84192
"
..
X =(1.5,0) / "" 3
E22 =3.25732
U(X")= (,64167)';/ X21
o ~~~L~~~~~~XI
1.0 2.0 3.0
4.0
d B
' B 4:/(3.6,5.37)
~.6
3.5
~ .. , .9)
2.0
o(l.75,1.9t)
"', f3
1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0
Figure 3 Solution Trajectory in '£2£3' Space
64
REFERENCES
Belenson, S.M. and K.C. Kapur, "An Algorithm for Solving Multi
criterion Linear Programming Problems with Examples," Operations
Research Quarterly, 24, No.1, March, 1973, pp. 6577.
Benayoun, R., J. de Montgolfier, J. Turgny and 0.1. Larichev,
"Linear Programming with Multiple Objective Functions: STEP
Method (STEM)," Mathematical Programming, 1, No.3, 1971,
pp. 366  3 75 •
Chankong, V., "Multiobjective DecisionMaking Analysis: The Inter
active Surrogate Worth Tradeoff Method," Ph.d. dissertation,
Systems Engineering Department, Case Western Reserve University,
Cleveland, Ohio, January 1977.
Chankong, V. and Y.Y. Haimes, "On Multiobjective Optimization
Theory: A Unified Treatment," submitted for publication in
Operations Research, 1976.
Cohon, J.L. and D.H. Marks, "A Review and Evaluation of Multi
objective Programming Techniques," Water Resource Research, 11,
No.7, April, 1975, pp. 208220.
Fishburn, P.C., "Bernoullian Utilities for MultipleFactor Situa
tion," in J.L. Cochrane and M. Zeleny, Eds., Multiple Criteria
Decision Making, University of South Carolina Press, Columbia,
South Carolina, 1973, pp. 4761.
Geoffrion, A.M., J.S. Dyer and A. Feinberg, "An Interactive
Approach for MultiCriterion Optimization with an Application to
the Operation of an Academic Department," Management Science,
19, No.4, 1972, pp. 357368.
Haimes, Y.Y., Hierarchical Analyses of Water Resources Systems:
Modeling and Optimization of Largescale Systems, McGrawHlll
International Book Company, Nel'! York, New York, 1977.
Haimes,Y.Y., and V. Chankong, "KuhnTucker Multiplie.rs as Tradeoffs
in Multiobjective DecisionMaking Analysis," submitted for
publication in Automatica.
Haimes, Y.Y. and W.A. Hall, "Multiobjectives in Water Resources
Systems Analysis: The Surrogate Worth Tradeoff Method," Water
Resources Research, 10, No.4, 1974, pp. 615624. 
Haimes, Y.Y., W.A. Hall and H.T. Freedman, Multiobjective Optimiza
tion in Water Resources Systems, Elsevier Scientific Publlshlng
Co., Amsterdam, 1975.
Hall, W.A. and Y.Y. Haimes, "The Surrogate Worth Tradeoff Method
with Multiple DecisionMakers," in Multiple Criteria Decision
Making: K1oto, 1975, M. Zeleny, Editor, SpringerVerlag, Inc.,
New York, 976, pp. 207233.
67
References (continued)
Lasdon, L.S., O¥timization Theory for Large Systems, MacMillan Co.,
New York, N• . , 1970.
Luenberger, D.G., Introduction to Linear and Nonlinear Programming,
AddisonWesley, Reading, Massachusetts, 1973.
MacCrimmon, K.R. and D.A. Wehrung, "Tradeoff Analysis: Indiffer
ence and Preferred Proportion," Proceedings of a Workshop on
Deicison Making with MUltiyle Confllcting ObJectives! Inter
national Institute for Ap~ fed ~ystems Analysis, Sch oss
Laxenburg, Austria, Vol. ,Oct. 1975.
Maier Rother, C. and M.F. Stankard, Jr., "A Linear Programming
Approach to Choosing between Multiobjective Alternatives,"
presented at the 7th Mathematical Programming Symposium, the
Hague, 1970.
Miller III, J.R., "Professional DecisionMaking: A Procedure for
evaluating Complex Alternatives," Praeger Publishers, N.Y., 1970.
Miller, D.W. and M.K. Starr, The Structure of Human Decisions,
PrenticeHall, Englewood cliffs, New Jersey, 1967.
Monarchi, D.E., C.E. Kisiel and L. Duchstein, "Interactive Multi
objective Programming in Water Resources: A Case Study," Water
Resources Research, 9, No.4, August 1973, pp. 837850. 
Rarig, H., "Two New Measures of Performance and Parameter Sensi
tivity in Multiobjective Optimization Problems," M.S. Thesis,
Case Western Reserve University, Cleveland, Ohio, 1976.
Savir, D., "Multiobjective Linear Programming," Operations Research
Center, College of Engineering, No. ORC 6621, University of
California, Berkeley, Calfornia, 1966.
Steuer, R.E., "An Interactive Linear Multiple Objective Programming
Approach to Forest Management," presented at ORSA/TIMS joint
national meeting at Miami, Florida, Nov., 1976.
Stevens, S.S., "Measurement, Psychophysics and Utility," in C.W.
Churchman and R. Ratoosh (eds.), Measurement: Definitions and
Theories, John Wiley and Sons, New York, 1959, pp. 1863.
Thiriez, H. and S. Zionts, eds., Multiple Criteria Decision Making
JouyenJosas, France 1975, SpringerVerlag, Berlln, Helde1berg,
New York, 1976.
Wallenius, J., "Comparative Evaluation of Some Interactive
Approaches to Multicriterion Optimization," Management Science,
Vol. 21, No. 12, August 1975.
Zeleny, M., Multiple Criteria Decision Making, Kyoto 1975, Springer
Verlag, Berlin, Heidelberg, New York, 1976.
Zionts, S. and J. Wallenius, "A Interactive Programming Method for
Solving the Multiple Criteria Problem" Management Science, Vol.
22, No.6, February 1976.
CARDINAL PREFERENCE AGGREGATION RULES
FOR THE CASE OF CERTAINTY
James S. Dyer
University of California, Los Angeles
Rakesh K. Sarin
Purdue University
ABSTRACT
This paper presents a theory of cardinal social welfare func
tions for choices of certain consequences. This development
parallels the social welfare theory for choices among risky
consequences based on the assumption of social choice preferences
consistent with the von NeumannMorgenstern axioms. In the case
of certainty, however, this axiomatic base is replaced with one
from the theory of difference measurement. The result allows
expressions of "strength of preference" to be explicitly inc or
porated into decision rules for social choice. Included are
specifications of the independence conditions that imply additive,
multiplicative, and more complicated forms of cardinal social
welfare functions.
1. INTRODUCTION
Taken together, these three conditions imply that the group PAR will
be a linear combination of the individual utility functions.
Critics of Harsanyi's formulation have attacked both H2 and
H3 as being unreasonable assumptions. Fishburn [1976] notes that
lotteries are an acceptable basis for group decision making only
in very restrictive, special cases. Both Diamond [1967] and Sen
[1970] have argued that the Baysian rationality postulates may
not be appropriate for a group (H2), since they do not consider
the issue of equity of the outcomes. Harsanyi [1975] argues
against these objections to H2, but he does admit that an indi
vidual might reject H3. By rejecting H3, however, an indivi
dual indicates that the wellbeing of the members of the group is
not his overriding concern, " ... and that he is willing to sacrifice
their wellbeing, at least in some cases, to his own egalitarian
preferences when the two conflict with each other" [Harsanyi, 1975].
Assuming both Hl and H2, but weakening H3, Keeney and
Kirkwood [1975] provide conditions for the existence of nonlinear
PAR's. These developments are discussed by Keeney and Raiffa
[Ch. 10, 1975].
In order to apply these cardinal PAR's for risky consequences,
it is necessary to make interpersonal utility comparisons. Some
authors reject this concept, but we agree with Harsanyi [1975] that
such comparisons are, in fact, commonly made in practice. Unfor
tunately, these PAR's involve risky utility functions for indivi
duals (H1), and it is wellknown that risky utility functions
cannot be legitimately interpreted as revealing strength of pre
ference (e.g., see Ellsbergh [1954]). This may complicate the
difficult problem of scaling and weighting the individual utility
functions. Further, the PAR itself cannot be given a strength of
preference interpretation for the group.
Finally, a group may occasionally face a situation in which a
72
o
there exist wi: X to Re, i 1, ... , n such that
n
i = l , ... ,n, such that W'(v) = I W!(v.). We extend this
i=l 1 1
W (xl)  Wc (x 2 ) ~ Wc (x 3 )  Wc(x4)
c
79
Sarin [1977a] for the detailed proof), so (ii) and (iii) are true
duals' preferences.
analogous, as are his H3 and our AS. Therefore, we are left with
80
n
rankings of preference differences, so Wc(x) L LV.(x).
i=l l l
Theorem 4. If conditions AI, A4', A9, and AIO hold, then there
exists a measurable PAR Wc: X + Re, and
n n
hivi(x) + L Aiv. (x) Vj(x) + ...
i=l i=l ~
j>i
n n
W~ (v) L A. wi' (vi) + iI1AijWi(Vi)Wj(Vj) +
i=l 1
j>l
n n
1 + AW~(V) IT [1 + AAiwi(v i )] if I A. 1 1
i=l i=l 1
or
n n
W~(v) I Aiwi(v i ) if l Ai 1
i=l i=l
where wi(v i* ) = 1, and wi(v i *) = O. Again, we extend the result
to X in the natural way. Our choice of scaling and AID ensures
REFERENCES
INTRODUCTION
The general problem of how to determine the worth or utility
of alternatives that vary on many dimensions is of great practical
importance. Although the number and types of situations that require
such evaluations are large, the most usual way of performing such
tasks has been unaided "intuition" (or, clinical judgment); Le., the
decision maker somehow does a mental tradeoff analysis between the
vario~s attributes and alternatives in order to come to an evaluation/
decision. The cognitive difficulties of performing such a feat are
formidable. For example, consider a situation with ten alternatives,
each varying on six attributes. The intuitive decision maker has the
task of locating ten alternatives in a six dimensional indifference
space and picking the one with the highest utility. In such complex
situations, an accumulating· body of psychological research on the
decision process has shown that people will reduce task complexity by
using various heuristics (e.g., Tversky, 1969; 1972; Payne, 1976).
While these heuristics have the advantage of allowing a decision maker·
to perform a complex task, they may lead to nonoptimal behavior
(e.g., consistent intransitivities). Furthermore, the literature on
clinical judgment (Meehl, 1954; Sawyer, 1966) has also shown that
experts have great difficulty in intuitively combining information in
appropriate ways. Therefore, ·there is a need for an analytic method
for determining the worth of multiattributed alternatives.
Decision theorists have attacked the above problem by formulat
ing methods that attempt to assess the worth of objects/alternatives
88
SMAUP
We begin by examining the various steps in the SMAUP procedure
while providing rationales as we go along.
(1) Q?_~~ining and measuring attributes. The first step is to
decompose the objects/alternatives into their relevant attributes.
This requires that one have substantive knowledge regarding the
phenomenon of interest. The use of "experts" may be useful here
since they are most likely to know what is "relevant" and what isn't
(we discuss the problem of how many attributes to have later in the
paper). For our example of player performance, the following eight
attributes were used: field goal percentage (FG%) , free throw per
centage (FT%) , rebounds (REB), assists (ASSIS), steals (STS) , per
sonal fouls (PF) , points per minute played (P/M) , and blocked shots
(BS). These attributes cover both offensive and defensive aspects of
performance, although they are certainly not exhaustive. Once the
attributes are obtained, it is necessary to measure each object/
alternative on each of the attributes. In our example, the NBA keeps
records of every player's performance on a large number of attributes.
Therefore, for every object (player) we have a measure of that
player's "score" on each of the eight attributes. Note that these
attributes can be objectively measured (and contain very little
measurement error). We discuss the problems that result when the
90
(1)
k
U. L: u(x iJ.) (3)
1
j=l
We discuss this assumption in greater detail in step (3). The
reason for introducing it now is to show how it simplifies the esti
mation of the parameters in (2). By substituting (2) in (3), we get
the following:
k k k
(bJ.x iJ. + a J.) = L: b.x .. + L: a.
L: (4)
j=l j J 1J j J
.th units.
tJ.z. = change in J attribute when measured in
J
Then, the relative importance of the jth attribute is defined as
S. = (tJ.U/tJ.z.)/'i.(tJ.U/tJ.z.) (7)
J J j J
where,
Sj = relative importance of the jth attribute.
Note that the denominator in (7) is constant for any jth attribute,
i. e. ,
'i.(tJ.U/f1z.) K
j J
where
K = constant.
Therefore,
Sj = tJ.U/f1z.K (8)
J
We want to express Sj in terms of b. so that we can make use of
J
equation (5). From (3) vIe know that
(9)
i.e., for any change in u(x j ) we get exactly the same change in U.
Therefore, we can substitute f1u(X. ) for f1U in (8),
J
S. = f1u(x.)/f1z.K = f1u(x.)/[f1(x./s.)]K (10)
J J J J J J
We know that f1u(x.) = b.(x· t  x· t ) (where xJ. t denotes adjacent
J J J 1 J 0
values of x j ). Therefore,
[b.(x· t
J J 1
X. t )] / [(x. t
J O Jl
 x. t ) / s . K
JO J
J
l:S·=l.O
j J
so that the idea of the relative importance of an attribute is easily
interpreted as a percentage of all importance weights.
We can now solve for bj by using (11),
(12)
~ ~ (S j x i j ) / s j] + C (l3)
Given our assumption about monotonic utility for each attribute, condi
tional monotonicity says that "more" of an attribute is always better
than less, regardless of the levels of the other attributes. Condi
tional monotonicity can be violated if there is an interaction (in
ANOVA terms) that involves lines crossing or lines whose slopes have
different signs. In many practical situations it is difficult to
think of examples where more is better than less for attribute xl'
at one level of x z' but less is better than more at a different
level of x z. For example, consider the attributes of price and
quality. One should prefer high quality to low quality at all levels
of price (or, low price to high price at all levels of quality). The
assumption of conditional monotonicity does not guarantee that Ui
will be an additive function of u(x j ). A formal proof of the addi
tivity of component utilities exists iff the attributes are mutually
preferentially independent (see, Keeney & Raiffa, 1976, theorem 3.6).
While our assumptions do not guarantee an additive utility function,
we feel that they provide a good approximation for most practical
situations.
Methodology. Our intent is to use the steps outlined above to
calculate Ui for players in the NBA for the seasons 19731974 and
19741975.
Procedure. At the end of each season, the NBA publishes
"statistics" for every player in the league. The eight attributes we
consider have already been mentioned (FG%, FT%, REB, ASSIS, STS, LPF,
BS, P/M). In order to evaluate player performance, it is necessary
for players to have played a sufficient amount of total time. There
fore, we consider players who played a minimum of 1,000 minutes (the
need for doing this can be seen by considering that the range of
"minutes played" varies from Z to over 3,000). Our next step was to
examine the roster of each team (17 teams in '73'74; 18 teams in
'74'75) and label each player as being either a guard, forward or
96
center. Where players played more than one position (usually £orward
guald) , the position that they usually played was used. The reason
for considering three different positions is that it is very difficult
to compare performance across positions since the relative importance
of the various attributes is different for the different positions
(e.g., "rebounding" would seem mUl!h more important for a center than a
guard). Therefore, we seek a rank order of all players in the league
(across teams), within a particular position, for the two seasons. It
should be mentioned that the concern for dealing with each position is
mirrored by the fact that the NBA allstar team is always made up of
2 guards, 2 forwards, and a center (which is the usual makeup of any
team). We will have more to say about the allstar team later in the
paper.
Our next step was as follows: For each season, three matri.ces
of data (one for each position) were set up. The rows of each matrix
contained "players" and the columns were the eight attributes. The
entries in each matrix were the ith player's score on the jth
attribute (x ij ). The numbers of players for each position were:
guards53 and 59 for '73'74 and '74'75, respectively; forwards6l
and 63 for the two seasons; centers19 and 31.
Once the data were in matrix form, the standard deviation of
each column was calculated (s j) and the entries (x ij ) were divided
by their corresponding Sj' i.e., Xij/S j . This procedure corresponds
to step (2) discussed earlier.
Our next problem was in obtaining estimates of Sj' the rela
tive importance of the j attributes. Two methods using expert judg
ment were used (as well as one method using equal weights). Fiftyfive
questionnaires were mailed to newspaper sportswriters and television
sports broadcasters. We received 18 usable questionnaires (33%). The
respondents came from such places as the New York Times, Sports Illus
trated, and the Chicago Tribune. The "experts" were asked to consider
97
each position and then: (1) to rank order the eight attributes in
terms of how important each is to overall performance (8 was most
important, etc.) and, (2) rate, on a 10 point scale, how important
each attribute is to overall performance. Previous research (Ecken
rode, 1965) has suggested very little difference in the weights that
are obtained by these two methods. The weight for the jth attribute
was calculated by the following formula:
Results
Our first results concern the weights for the attributes ob
tained by the rating and ranking methods for the three positions.
This is shown in Table 1.
Table 1
Interjudge * r = W= r = W= r = W=
reliability .565 .752 .403 .622 .591 .657
(18 judges)
p < p < p < p < p < p <
.001 .001 .001 .001 .001 .001
In comparing the rating and ranking methods, it can be seen that the
two methods yield very similar results. Hmvever, the difference in
importance weights across positions does differ, especially for guards
and centers (e.g., REB). The interjudge agreement is shown at the
bottom of the table. for both the rating and ranking methods, there
is a moderate degree of agreement (all indices are significant at
p < .001).
Our major results deal with the rank order of players within
each position on the basis of Vi (total utility). In order to
99
19731974
Predicted
Actual Rank Rate Equal
Ranking Method
Actual
First Second None
/First 7 1 2 10
prediction"
Second 1 2 7 10
8 3 9 20
Rating Method
Actual
First Second None
/First 8 0 2 10
Prediction,
'Second 0 5 5 10
8 5 7 20
Equal Method
Actual
First Second None
/First 7 1 2 10
Prediction
""'Second 1 3 6 10
8 4 8 20
weighting methods, the number of exact hits was 9, 13, and 10 for
ranking, rating, and equal weighting, respectively. However, for the
ranking and equal weighting methods, two "near hits" were also ob
served. Although there might be several ways to further analyze these
data, the similarity of the results for all three weighting methods
seems to be the major finding.
Discussion
The basic issue in using any multiattribute procedure is the
evaluation of results. Since these procedures are used in situations
where there is no "ultimate criterion" (Thorndike, 1949) of worth,
judgment of some type is often used for comparison purposes. However,
it must be remembered that the literature on clinical judgment (cf.
Meehl, 1954; Sawyer, 1966) clearly shows that global judgments (which
are clinical combinations of attributes) are quite inaccurate as com
pared to mechanical combination (Edwards, et al., 1968; Einhorn, 1972).
It would seem that the results found in clinical judgment studies
would be directly applicable to the assigning of "worth" to multi
attributed alternatives. One study speaks directly to this point.
Yntema and Torgerson (1961) trained subjects in attaching worth to
previously neutral objectse1lipses that varied in size, shape, and
color. Subjects viewed 180 stimuli for each of 10 consecutive days
and judged the worth of the stimuli. Each stimulus had been given a
true worth by the experimenter according to the sum of the three two
way interactions of size (i), shape (j), and color (k). Subjects
were given immediate feedback as to the correct answer after each
trial ("correct" being defined by ij + ik + kj). On the 12th day,
subjects again judged worth but were not given feedback. The correla
tion of the subjects' judged worth and actual worth was .84 (average
over 6 subjects). However, the correlation of true worth with the sum
of i + j + k was .97: (The difference in r 2 ,s is. 71 vs . . 94.)
This means that an equal weighted additive model using three main
105
a priori;
(4) The /3. IS are the relative importances of the attributes;
J
(5) We have not left out important attributes;
(6) The attributes are essentially uncorrelated with each
other.
We consider (5) and (6) to be the most serious problems, and
discuss them together since they involve related matters. Dawes and
Corrigan (1974) have pointed to what they consider to be the key issue
in prediction situationsviz., finding the right predictor variables.
This implies that the function form and the weighting problems are
likely to be subsidiary. We feel that this is equally applicable to
multiattribute utility procedures. Therefore, did we leave out im
portant attributes in evaluating performance? One might argue that we
had too few attributes relating to defenseor that we didn't have
measures of "leadership," "clutch playing," etc. We agree with this
criticism, yet its importance in casting doubt on the model leads us
to consider point (6) above.
Consider that there were many more attributes that could have
been included in the model. However, many of these might be highly
correlated with those we have already chosen. If these were included,
we would be guilty of overcounting an attribute's influence in terms
of its effect on Ui . The reason for this is that the amount of vari
ance in Ui accounted for by u(x j ) is a function of both the vari
ance of u(x j ) and its covariance with other attributes. This means
that as more attributes are included in the model, the probability of
including highly correlated ones increases, making it difficult to
determine the "effective ,veight" (Ghiselli, 1964) of any attribute.
Therefore, although there is a danger of having too few attributes in
any model, there is also the danger of having too many. Whether the
107
global judgment:
(1) Given the evidence of the superiority of mechanical as
opposed to clinical combining of information, multiattribute utility
procedures should be preferred.
(2) An analytic approach makes the evaluation process explicit.
Methodological Considerations
Although the advantages of using an analytic procedure rather
than clinical judgment are numerous, several further issues deserve
discussion. We briefly discuss the following: (1) The effects of
the object/alternative set; (2) Subjectively measuring x ij ; (3) In
corporating "price" in the analysis; (4) When equal weights should not
be used.
(1) Consider that you wish to buy a new car. Do you think of
every possible make, size, and style as being within the relevant set
of alternatives? The answer is most likely, "no." Clearly, one's
resources and goals will delimit the set of all alternatives into a
relevant subset. While it is not clear how this initial delimiting
is done, the consequences of dealing with a selected subset of
alternatives are important. In order to illustrate, let's
assume that you have decided to buy a luxury car. Furthermore, assume
that "comfort" is an important attribute to you. How might the
utility function for comfort look? If one considered the function over
the full range (i.e., over all cars) it might be decidedly nonlinear;
e.g., at low to moderate levels of comfort (subcompacts and compacts),
the function is quite flat, rising quickly in the middle range (mid
size cars), becoming steeper at the high end (full size and luxury
cars), and then leveling off (extravagant cars). However, the fact
109
that you are only considering luxury cars has two important implica
tions: (1) linear utility functions are likely to be excellent ap
proximations since the relevant range of the attribute is smaller than
the plausible range (unless "plausible" is defined visavis the set
of alternatives considered); (2) the slope of the utility function and
the standard deviation of the attribute will differ depending on the
set of alternatives being considered. For example, the standard
deviation of comfort for luxury cars is likely to be different than
for compact cars (the slope will also be different). If one recalls
the definition of relative importance of an attribute [equation (11)]
as being a function of both the slope of the utility function and the
attribute standard deviation, it becomes clear that relative importance
must be defined (and elicited) for a particular class or subset of
alternatives. In our study this was done by asking for importance
weights for each of the three positions. Furthermore, it is interest
ing to note that the same person may have a different set of weights
depending on the set of alternatives that is being considered. Let's
say that you've just been fired and must consider sUbcompact cars
rather than luxury ones. Since the amount of comfort available in
these cars is low and your utility function is quite flat in this
range, this attribute may now be of little importance to you in choos
ing.
(2) In many situations, attributes cannot be objectively
measured. Therefore, experts will be needed to serve as "measuring
instruments." One way to get such measurements is to set up rating
scales and have each expert rate "how much" each alternative contains
of each attribute. Although good agreement between experts in terms
of measuring attributes has been found (Einhorn, 1974), one should be
aware of the various biases that exist when rating methods are used
(Guilford, 1954). Raters can be trained to be aware of these biases
and/or statistical methods can be used to eliminate them (Guilford,
110
1954). In either case, the average rating (over experts) can then be
used as the value of the alternative on the attribute. Formally, let,
Then the rating of the ith alternative on the jth attribute is,
r
x.. l: x .. /r
1J. p=l 1J
These values now provide the input for the analysis. If the rating
scales being used are comparable (e.g., 7point scales with anchors
like "poor," "average," "excellent"), there is no need to standardize
the attributes. Therefore, the basic computing formula is (13) with
out the terms.
In many decisions, price is an important attribute that
Conclusion
Although we feel that SMAUP is a very useful procedure for
evaluation, we would like to stress that each particular situation be
examined with respect to whether the assumptions made here are reason
able. If they are not (e.g., if conditional monotonicity is not
likely), then the simple method that we have Proposed should not be
used. Of course, an interesting question for further research con
cerns the sensitivity of results to violations of our assumptions.
However, until more is known about this, a prudent course of action is
recommended.
While we have discussed a number of technical questions con~
REFERENCES
1. ABSTRACT
This paper presents a mathematical programming algorithm for solving decision
problems under multiple objectives and its application to the practical problem of
resource allocation among the university activities of teaching and research. The
solution of such a problem, which is formally identical with the vector ~
problem, is generated by an interactive discussion process between the decision
maker and a computer as an anonymous partner. In this process the decision maker
is requested to provide under partial information about the set of feasible solutions
an answer for at least one component of any given efficient output (goal) vector,
that he would not accept losses regarding the corresponding actual numerical values.
The method converges as will be demonstrated by a numerical e~le. Though the
existence of a utility function is assumed neither explicitly nor implicitly, the
weights of the output components in the optimum simultaneously determined by the
process can be interpreted as a linear approximation to the utility function .of
the decision maker. Statements on the convergence rapidity of the process are made
in comparison with another numerical example.
2. A GOAL COMPONENT ORIENTED METHOD FUR SCLVING THE VECTOR MAXIMUM PROBLEM
(MULTIPLE CRITERIA DECISION PROBLEM)
can be understood as a structured dialogue between the d@cision maker and a computer
as an anonymous partner. Starting from the technical data, e.g. the set Y of feasible
goal combinations, and the information 0 obtained from the decision maker the
computer tends to reduce the set of decision alternatives in accordance with certain
given rules step by step, until the optimal solution is achieved or approximated
adequately. This ensues by the systematical choice of output vectors yE eff(Y),
for which the decision maker has to provide the information 0, and by deriving
from this restriction vectors w.
In addition to the computation of the optimum the algorithm yields at the beginning
of every iteration step informations about the shape of the goal set, which is
generally not completely lmown by the decision maker. On the basis of the goal
conflict the decision maker, maximizing one goal component, is told
 what amounts of all other goal components he will possibly lose;
 what amounts of all other goal components he will get at least.
These informations are suitable to reveal locally the decision struCture described
by 0 with assistance of the decision maker.
The rules of the iteratively used algorithm (FANDEL [1972], p. 5787; FANDEL [1977],
p. 151):
determine
(Rl) *k
Y
*k
Yk = max {vkIVEYAV~} for all k, k=l, •.. ,n,
M M n *k
(R2) Y y = lin L y ,
k=l
'k 'k M
(R3) y Yk = max {vklvEYA~y } for all k,
~ n
(R4) t,c ty = c for all k, t=(t 1 , ... ,t ), L tk=l and cElt
n k=l
(R5) y ty = max {tvIVEYAv~yM},
(R6) w w·l = y.l <===> 0 (y) = i; initial value w=O,
(R7) the optimal solution by y if the iteration is broken off,
are illustrated for one step in figure 1. Here 0(1)=1 is assumed; that is, the
decision maker will not accept further losses of the first goal component in the
sequel of the decision process.
The algorithm, the rule sequence of which is portrayed by the flow chart in figure 2,
possesses the following properties (FANDEL [1972], p. 80 ff.)
 it generates a series {wS}SElN of restriction vectors, which is monotonously
increasing and bounded and therefore converges to a point yEY,
 Y is an efficient point: yE eff(Y), and for all XESo(X,Z) holds z(x)=y,
 by every iteration step of the process the decision maker gets lmowledge about
2n+l output vectors of eff(Y).
119
figure 1
If eff(Y) is differentiable, after finding out the optimal solution y the hyperplane
computed by rule 4 in the last iteration step can be interpreted as a locally linear
approximation to a utility function of the decision maker. Then the vector t indicates
the weights of the goal components determined by the decision maker.
yes
yes I
~. ~oPt:=Y
figure 2
flow chart of the algorithm
121
T
x =(Xl""'~'~+l, .•• ,~,XN+l) , L<N, the vector of total outputs of an
university investment project, whereby any of these output components shall
be characterized by its input structure (ALBACH, PIEPER and SCHULER [1971],
p. 50 ff. and p. 79 ff.),
= (xl, .•. ,~)T the vector of teaching outputs,
T
= (xL+1""'xN) the vector of research outputs,
~+1
the output component administration,
c = (c 1 , •.. ,cM)T the vector of available resources for the investment
project and
D = (dik ), i=l, •.. ,M and k=l, .•. ,L,L+l, ... ,N,N+l, the matrix of production
coefficients, where a linear technology in the university is assumed; it
B F N+l B F N+l ..
holds D= (D ,D,D ), where D , D and D are the partlal matnces
associated with the teaching, research and administration outputs.
L, M, N > 0 and integers.
The situation to the decision maker: "what amounts of the teaching and research
outputs in planning a university are to realize under simultaneous consideration of
teaching and research"  the output component administration remains of inferior
importance  can now be formally described by the vector maximum problem
(with zk(x)=~, k=l, ..• ,N+l):
(3) " max " x( xl""'~'~+l""'~'~+l )T
xEX
subject to
X= {Dx:5CI
x ;:: 0
This means that the optimal compromise solution of the problem must be chosen of
the set of efficient combinations of total outputs. Applying the presented method
the determination of the unique optimal solution of this vector maximum problem
by the public decision maker is described in the following numerical example.
table 1
activities 11c
k = notation unit of measure
I teaching activities
1 student in the lth course of study
2 student in the 2nd course of study
3 student in the 3rd course of study
4 student in the 4th course of study
5 candidates for a doctor's degree
6 practitioner continuing studies
II research activities
7 project professor without assistant subject 1
8 project professor without assistant subject 2
9 project professor without assistant subject 3
10 project professor without assistant subject 4
11 project professor with assistant subject 1
12 project professor with assistant subject 2
13 project professor with assistant subject 3
14 project professor with assistant subject 4
15 project assistant with professor subject 1
16 project assistant with professor subject 2
17 project assistant with professor subject 3
18 project assistant with professor subject 4
19 III faculty administration
comments to table 1:
subject 1 = theoretical economics
subject 2 = business administration
subject 3 = statistics
subject 4 = econometrics / operations research
123
table 2
capacities ci
The demand for the several resources by the teaching. research and administration
outputs is given by a matrix D of technical university production coefficients
written down in rows on the following page.
The vector c of capacities will be given by:
c=(19.23.20.1.150.2.6.15.18.23,20.150.20.19.20.900.1.20.2)T.
The problem to deterndne an optimal destribution of the resources among the several
activities by the outputoriented interactive process then runs as follows
(4) "max"  x(x1 ••••• x19 )T
xEX
subject to
x :0
f
Dx S c
x
1
~ of
124
MATRIX D
0.003652 0.003652 0.018447 0.026529 0.010501 0.013151 0.547945 0.547945 0.547945 0.547945
0.547945 0.547945 0.547945 0.547945 0.082192 0.082192 0.082192 0.082192 1.499999
0.039342 0.047632 0.009868 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.078947 0.078947 0.078947 0.078947 1.052630 1.052630 1.052630 1. 052630 0.131579
0.003652 0.003652 0.018447 0.026529 0.010501 0.013151 0.547945 0.547945 0.547945 0.547945
0.547945 0.547945 0.547945 0.547945 0.082192 0.082192 0.082192 0.082192 2.000000
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1. 000000
0.300000 0.300000 0.300000 0.400000 0.500000 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.004000 0.004000 0.003000 0.001000 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.014000 0.012000 0.014000 0.014000 0.0 0.016000 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.043750 0.062500 0.018750 0.018750 0.012500 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.003652 0.003652 0.018447 0.026529 0.010501 0.013151 0.547945 0.547945 0.547945 0.547945
0.547945 0.547945 0.547945 0.547945 0.082192 0.082192 0.082192 0.082192 0.500000
0.039342 0.047632 0.009868 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.078947 0.078947 0.078947 0.078947 1.052630 1.052630 1.052630 1.052630 0.131579
0.003652 0.003652 0.018447 0.026529 0.010501 0.013151 0.547945 0.547945 0.547945 0.547945
0.547945 0.547945 0.547945 0.547945 0.082192 0.082192 0.082192 0.082192 2.000000
0.018260 0.018260 0.092233 0.132644 0.052507 0.065753 3.739724 3.739724 3.739724 3.739724
3.539723 3.539723 3.539723 3.539723 1.510958 1.510958 1. 510958 1. 510958 10.499990
0.003652 0.003652 0.018447 0.026529 0.010501 0.013151 0.547945 0.547945 0.547945 0.547945
0.547945 0.547945 0.547945 0.547945 0.082192 0.082192 0.082192 0.082192 2.000000
0.003652 0.003652 0.018447 0.026529 0.010501 0.013151 0.547945 0.547945 0.547945 0.547945
0.547945 0.547945 0.547945 0.547945 0.082192 0.082192 0.082192 0.082192 1.000000
0.006652 0.006652 0.021447 0.030529 0.015501 0.013151 0.547945 0.547945 0.547945 0.547945
0.547945 0.547945 0.547945 0.547945 0.082192 0.082192 0.082192 0.082192 0.0
0.0 2.399999 0.0 7.500000 5.000000 0.0 0.0 0.0 0:0 0.0
1.200000 1.200000 1.200000 1.200000 1.599999 1. 599999 1.599999 1.599999 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.500000
0.003652 0.003652 0.018447 0.026529 0.010501 0.013151 0.547945 0.547945 0.547945 0.547945
0.547945 0.547945 0.547945 0.547945 0.082192 0.082192 0.082192 0.082192 2.000000
0.004500 0.004500 0.004500 0.006000 0.007500 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
125
If the decision maker now will agree with the argumentation process described in
section 2.3., he gets
1) an always improved view over the set of feasible efficient output combinations
by every iterative step S of the procedure,
2) a systematic reduction of this set up to the desired optimal point, and
3) the weights of the output components, which characterize the several offered
solutions and the optimal point itself.
The numerical picture of the decision process is written down on the following
pages. For E was set the value 10; with 19 activities given this choice of E will
correspond to an average tolerance of nearly 0.5 units per component; distributing
the tolerances according to the order of magnitude of the components this E amounts
to a maximum variation of 3%.
TOTAL MOOEL
============
mu
R 1 342.856934 0.0 0.0 0.0 0.0 75.000229 27.409454
0.0 0.0 0.0 0.0 0.0 0.0 0.0
9.035767 0.0 0.0 0.0 0.0
0.0 240.000000 0.0 0.0 0.0 195.000061 24.921814
0.0 0.0 0.0 0.0 0.0 0.0 0.0
10.989916 0.0 0.0 0.0 0.0
0.0 0.0 428.571289 0.0 9.523899 0.0 15.564435
0.0 0.0 0.0 0.0 0.0 0.0 0.0
17.832321 0.0 0.0 0.0 0.0
284.444092 0.0 0.0 120.000000 0.0 21.111481 23.725159
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 1.000000
144.444504 0.0 0.0 0.0 180.000000 248.611099 21. 558395
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 1.000000
0.0 0.0 0.0 0.0 173.047989 375.000000 16.362167
0.0 0.0 0.0 0.0 0.0 0.0 0.0
21.725021 0.0 0.0 0.0 1. 000000
0.0 0.0 0.0 0.0 0.0 0.0 32.850006
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0
32.850006 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 32.850006 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 32.850006 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 32.850006 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 32.850006 0.0 0.0
0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 32.850006 0.0
0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 32.850006
0.0 0.0 0.0 0.0 173.007965 374.999756 17.256699
0.0 0.0 0.0 0.0 0.0 0.0 0.0
21.850021 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 173.007965 374.999756 17.256699
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 21.850021 0.0 0.0 0.0
0.0 0.0 0.0 0.0 173.007965 374.999756 17.256699
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 21.850021 0.0 0.0
0.0 0.0 0.0 0.0 173.007965 374.999756 17.256699
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 21.850021 0.0
152.981247 0.0 0.0 0.0 174.877655 241.141296 19.377853
0.0 0.0 0.0 0.0 0.0 0.0 0.0
16.007339 0.0 0.0 0.0 1. 000000
M
DEMAND FOR CAPACITIES 8Y x
R 4 WEIGHTING ACCORDING TO RI
COEFFICIENTS OF HYPERPLANE 09
mu
R 4 0.00069060 0.00069058 0.00348829 0.00501660 0.00198568 0.00248687 0.10361534
0.10361534 0.10361534 0.10361534 0.10361534 0.10361534 0.10361534 0.10361534
0.01554221 0.01554222 0.01554222 0.01554222 0.09454840
muz
R 5 125.840164 100.226303 80.171539 64.119278 25.234024 25.687561 2.005774
2.005774 2.005774 2.005774 3.498771 3.498771 3.498771 3.498771
2.538501 2.538501 2.538501 2.538501 0.984623
R 6 125.000000 100.000000 80.000000 64.000000 25.000000 25.000000 2.000000
2.000000 2.000000 2.000000 3.498771 3.498771 3.498771 3.498771
2.500000 2.500000 2.500000 2.500000 0.984623
R 8 EPSILON = 10.000000 DEL TA = 10.719031
mu~
R 5 125.652435 100.226303 80.134201 64.093323 25.233734 25.479813 2.004518
2.004518 2.004518 2.004518 3.503284 3.503284 3.503284 3.503284
2.530122 2.530122 2.530122 2.530122 0.985432
R 6 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0
R 8 EPSILON = 10.000000 DEL TA 9.988041
table 3
activities 19 12
capacities 19 19
E= 10 1
tolerance (units/component) 0.5 0.08
variation (in percent) 3 5
iteration steps 48 11
steps/component 2.5 1
CPUtime (in minutes) 15 2.8
CPUtime/step (in seconds) 20 15
4. FINAL REMARKS
The formulation of the problem of efficient planning in university with integrating
teaching and research by the vector maximum problem and the presented argumentation
process for solving this problem have pointed out, that the decision maker receives
x
within the solving algorithm simultaneously the optimal output combination and
its relative weights t characterizing this solution. Hence one has a direct
evaluation of the teaching, research and administration outputs by prices, which
follow from adjusting the activitylevels to be realized to the available resources.
Beyond that, these prices are suitable to solve the problem of efficient planning
in university with respect to teaching and research areas by a decentralized decision
process as presented in GEOFFRION"[1970].
Moreover, the presented algorithm provides an argument, that the apparently contrary
approaches of demand and profitability models in planning universities can be
combined with each other to one approach characterized by the algorithm. While the
output weighting in the rules R4 and R5 will correspond to the profitability approach,
the demand approach enters the calculus by rule R6. So for each optimal compromise
solution x E eff(X) desired by the public decision maker these instruments of
rational university planning are only two aspects of one and the same problem
solving method.
5. REFERENCES
[ 1] Albach, H., Pieper, H. and SchUler, W.: Hochschulplanung, Bonn 1971.
[ 2] Belenson, S.M. and Kapur, K.C.: An Algorithm for Solving Multicriterion Linear
Programming Problems with Examples, Operational Research Quarterly, Vol. 24,
No.1, 1973, p. 6577.
[ 3] Benayoun, R., de Montgolfier, J., Tergny, J. and Laritchev, 0.: Linear
Programming with Multiple Objective Functions: Step Method (STEM),
Mathematical Programming, Vol. 1, No.3, 1971, pp. 366375.
130
Peter H. Farquhar
Northwestern University
Evanston, Illinois
Abstract
This paper examines decision problems where the evaluative cri
teria are interdependent. After a brief study of interaction effects
in the statistical analysis of multifactor experiments, a classifica
tion of interactions is developed for mUltiple criteria decision prob
lems. The classification includes artificial, ordinal, configural,
and holistic interactions. Some interactions are removable by trans
forming the response scale or restructuring the factors, while other
interactions are not removable and must be considered explicitly. The
interaction effects in various nonadditive utility models are dis
cussed, and the method of fractional hypercubes is used to interpret
the structural forms of these models.
1. INTRODUCTION
6See Farquhar (1974), Farquhar and Rao (1976), Green and Devita
(1974, 1975), and Green et al. (1972).
8
See also Cochran and Cox (1957), Cox (1958), Davies (1967) John
(1971), Keppel (1973), Winer (1971), and others, for further inf~rma
tion on the design and analysis of mu1tifactor experiments.
135
B (color)
A80 $200
I}~ A (clarity)
~
""
C (size)
When n factors are considered, each with two levels, the experi
n
ments are called 2 factorial designs. Such experiments are compara
tively easy to analyze because there is no distinction between quali
tative and quantitative factors.
Notation
Let Yijk denote the response associated with the combination
(i, j, k) where i, j, k E [0, l} are levels of factors A, B, and C
respectively. A dot " JI in lieu of a subscript in Yijk denotes the
136
Y**k = Yllk  Y10k  YOlk + YOOk' and Y.*k = Yllk  Y10k + YOlk  YOOk·
A bar "_" over any quantity denotes the average obtained by dividing
the quantity by the number of its summands. In 2n factorial designs,
a bar over a quantity involving a total of r dots and stars indicates
division by 2r : Yij. ~Yij. and Y*k = b.*k. This notation gener
alizes to n factors and provides compact representations of factorial
effects and interactions.
Main e ffec ts
One can analyze a multifactor experiment in terms of the separate
effects of each factor and the joint effects of their interactions on
the response variable. For instance, a simple estimate of the effect
of factor A is the change in response resulting from a change in the
level of A while other factors are fixed. When A has two levels, the
estimated main effect of A9 is half the difference between the average
of responses with factor A at levelland the average with A at level
0, thus
( 1)
Y··l   ) =
Y•• o
A
Interactions
When factors behave independently, the main effects are meaning
ful quantities. However if a factor's effect on the response variable
depends markedly on the level at which another factor is fixed, then
the two factors are said to interact and the main effects alone do
not fully describe their joint effect. If A and B each have two
levels, for example, the estimated AB interaction is defined as half
the difference between the average effect of A with B at levelland
that with B at level 0,
(3a)
AB
(3b)
AC and BC (4)
ABC (5)
.
AB = (Yooo  YlOO  YOlO + YllO + YOOI  YlOl  YOll + Ylll)/8 (6)
Main effects
B B B
A A A
C C C
AB AC Be
Twofactor interactions
B B B
A A A
C C C
A B C
Threefactor interaction
C
ABC
Combinations
A  +  +  +  + 149.375
B   + +   + + 70.625
""o'" AB +   + +   + 66.875
....

QJ
....
r<I
C    + + + + 71.875
AC +  +   +  + 90.625
BC + +     + + 19.375
ABC  + +  +   + 18.125
~ijk (7b)
141
....
' ' white
$800
.... color
(size = 0.70 carats)
$600
$400
I
I
/
$200 I __ ..e
$0
B A AA AM AMA
(i) AB interaction CLARITY
$800
(clarity = AA)
white color
$600
$400
yellow color
$200
$0
o 0.20 0.40 0.60 0.80 1.00
(ii) BC interaction
0.75 carats or more, the two curves in Figure 4(ii) are parallel and
the effects of color and size are additive.
Keppel (1973, pp. 174185, 256262) provides further information
on investigating main effects and interactions with plots of the
experimental data. He considers eight different plots of twofactor
experiments to illustrate all examples of the presence or absence of
the main effects and interaction. He also points out some difficul
ties in detecting threefactor interactions in plots where twofactor
interactions are present. Winer (1971, pp. 351359) offers a number
of ways of overcoming these difficulties with either two or three
dimensional displays. Cox (1958, pp. 103108), on the other hand,
discusses the advantages of displaying the residuals (Le., removing
the main effects from the data) to detect interactions among different
factors.
Other topics
When an experiment involves a quantitative factor with more than
two levels present, it is desirable to modify the response model in
(7) to account for the functional relationship between the factor
C (9)
If one examines only the 100, 010, 001, and 111 columns in Figure 3,
the estimates for main effects in (9) are confounded (or confused)
with estimates for twofactor interactions: A= BC, B = ic, and
= AB.
A A
lOSee Anscombe (1961, 1973), Anscombe and Tukey (1963), Box and
Cox (1964), Cox (1958), Davies (1967), and others.
148
provide a simpler response model. Keeney and Raiffa (1976, pp. 256
257) give the following example,
Let Y and Z designate measures of the crime rate in
the two sections of a city, respectively • ••• The relative
ordering of lotteries for criminal activity in one section
may depend very much for political reasons on the level of
crime in the other section. However, suppose we define
S '" (Y + Z) /2 and T '" IY  Z \. Then S may be interpreted
as some kind of an average crime index for the city and T
is an indicator of the balance of criminal activity between
the two sections. Although there may be no simplifying
preference assumptions in Y x Z space, such properties may
exist in S x T space.
The YZ interaction is the regarded as artificial because it is
unnecessary. The new factors Sand T provide a clear understanding
of how one might utilize the criminal activity data. This simple
structure is ignored in the original formulation with Y and Z factors.
If the functional form of the interaction is not known in ad
vance, then one has little basis for reformulating the factors. One
can attempt various transformations, but unless the new factors are
easy to interpret or the resulting model is additive, there does not
seem to be much practical advantage in this effort.
Bogartz and Wackwitz (1970) list three common sources of artifi
cia1 interactions: (1) floor and ceiling effects, (2) rating biases,
and (3) intervening variables. Figure 4(ii) illustrates an inter
action between color and size which is attributable to the floor
effect of size on the response. The use of logarithmic and exponen
tial transformations on the response scale often reduces floor and
ceiling effects. Rating biases occur, for example, when a subject
exhibits an aversion for the ends of a rating scale or anchors his
ratings on a particular part of the scale. Such biases can be diffi
cult to remove with transformations. When an intervening variable
between the factors and the response is overlooked, the interactions
among factors are considered artificial because a more parsimonious
description of the decision process exists. There is no reason to use
interdependent factors like "left shoes" and "right shoes" if a model
149
For example, Xi(PI) implies that the preference ranking for levels in
Xi is unaffected by changes in the levels of the remaining factors.
With minor structural assumptions, one can show that XI(PI) for all
I N is necessary and sufficient for an additive representation of
c:
11
preferences over sure outcomes. For n ;;, 3, we have
(x, potato) > (x, salad) > (x, corn) > (x, peas), (11)
Even though these two responses curves are not parallel in Figure 5,
the ordinal nature of the interaction allows us to answer questions
about the main effect of each factor. For example, which has a
greater effect on the response, potato or salad? When configural
preference
response
lobster
steak
...   .... chicken
interactions are present, such questions about main effects may have
no answer.
If we now compare lobster with the other entrees, we note that
the conditional preference order over vegetables is not the same as
(11), because (lobster, salad) > (lobster, potato) in Figure 5. This
crossover effect produces a configura1 interaction between entrees and
vegetables. Unlike ordinal interactions, configura1 interactions can
not be removed by monotonically rescaling the responses, though it is
possible in some cases to transform or redefine the factors to remove
configura1 interactions.
Configura1 interactions are not uncommon in practice. Instances
of configura1 interactions appear in the evaluation of poultry stock
(Farquhar, 1977b), preferences for food item combinations (Green and
Devita, 1974, 1975), computer performance of timesharing systems
(Grochow, 1972), diagnoses of ulcer malignancies (Hoffman, Slovic, and
Rorer, 1968), attractiveness of stocks (Slovic, 1969), learning speed
of linguistic associations (Wallace and Underwood, 1964), and hetero
sexual somatic preferences (Wiggins and Wiggins, 1969), to name a few.
Farquhar and Rao (1976) examine configural interactions resulting from
balance or complementarity in evaluating subsets of mu1tiattributed
items. Keeney and Raiffa (1976) cite several cases where one or more
factors are not preference independent, so configural interactions are
present. Additional examples appear in Farquhar (1974) and Lisnyk
(1977) •
The presence of configura1 interactions sometimes indicates there
is a more fundamental explanation of response than provided by the
original factors themselves.
For example, the factors pressure and temperature
may affect the yield of a chemical reaction only through
that combination of pressure and temperature that deter
mines the frequency of molecular collisions. In fact,
the physical sciences contain many examples of systems
153
We note that >* is the dual order of > defined by p >*q iff q > p for
p, q E P. Also, > =0 indicates complete indifference, p ~ q for all
p, q E P. Generalized preference independence is defined by restrict
ing conditional preference orders on PI to XI" Examples of preference
reversals are given in Fishburn (1974), Fishburn and Keeney (1974,
1975), and Krantz et al. (1971, pp. 329339); the latter refers to
generalized preference independence as sign dependence.
An extension of sign dependence is illustrated in an example of
preferences for entrees and table wines. Suppose the level~ of factor
A are various table wines available at a particular restaurant. Fur
ther, suppose the levels of factor B are the entrees available, which
we assume are partitioned into the following classes: Bl (red meats),
B2 (white meats), B3 (poultry), and B4 (seafood). The conditional
preferences for wines in A are presumably the same for entrees within
a class Bj' but vary across classes for j = 1, ••• , 4. Thus wines are
class dependent on entrees. If there are only two classes and the
154
1 0 0 1 1 1 O. (14)
u(x i ,Xj ,y)  u(x i ,Xj ,y) + u(xi ,Xj ,y)
The factors Xl' .•. , Xn are interdependent if they are not additive
independent.
(15)
00 10 01 11
u(x I ' XI )  u(x I ,xI)  u(x I ,xI) + u(x I ,xI) O. (16)
and factors in T.
Value independence is another way of producing additivity,
(17b)
158
where the functions v S . on XS. in (17b) are derived directly from the
J J
condHional utilities in (17a).
for all xI E XI and all y E XI' where rx and S are realvalued func
tions on XI with S > 0, and u(xI\y) is a utility function on XI for
the conditional preference order >y on PI.
One can extend utility independence in the same manner as prefer
ence independence to include complete reversals of preference and com
p1e te indi f ference,
... ,
a i E [0, 1} for i E I, a i ° for i E 11, (20)
c 1u 1 (x 1 ) + c 2u 2 (x 2 ) + c 3u 3 (x 3 )
(22)
or a multiplicative decomposition,
(24)
... , where ai
*
= {0
if i EI} '
if i ~ I for leN. (22)
Partial decompositions
There are important differences between the concepts of inter
action in utility theory and those in factorial experiments. The
introduction of risk in a decision problem yields interdependencies
not found in factorial experiments. Also, some interactions in uti1
ity theory are directional in nature. For example,
In studying the health hazards posed by environmental
pollutants, two factors are widely used: Xl' the minimum
acute toxicity of the effluent, and X2' the ambient back
ground concentration. Over certain ranges of each factor,
it is reasonable to assume that toxicity is utility inde
pendent of concentration. However, concentration is never
utility independent of toxicity. Thus Xl (UI)X 2 , but not
X2 (UI)X 1 •
(Z3)
a
... , x. r , y):
~r
r+L:a. al
... ,
Ct
u(~;:. , •.• , ~i ' y) = 6 [(1) J u(x. , x. r , y):
~l r ~l ~r
° °
+ u(x l ' x 2 '
° °
Note that u(~i ' ••• , ~i ' y) = whenever xi = xi for i E I.
1 r
For n = 3 factors, the main effects are defined as
(26)
implies (a l , ... ,
X3
"
I
} Xl
X
" .
I
Xl
X2
I
I
) Xl .c& Xl
'
"
X3 X3
(29)
Apex:
u(x l ,xZ 'x 3 ) = clul(x l ) + c Zu Z(x2) + c 3u 3 (x 3 ) + c12ul(xl)u2(xZ)
(30)
Diagonal:
(31)
169
Quasipyramid:
u(x l ,x 2 ,x 3 ) = clul(x l ) + c 2u 2 (x 2 ) + c 3u 3 (x 3 ) + c12u12(xl,x2)
(32)
Semicube:
(33)
u(x. 1
,X: )  u(x. ,X: )
o
~ ~ ~ ~
f.(x.) (35)
~ ~
so f.~ (x.)
~.
represents the interaction between X.~ from x.~ O to x.~ and X.
~
o 1
from xI' to xI' Hence fi(x i ) is a meaningful singlefactor function
to use as an interaction component.
The alias structure of the diagonal decomposition in (31) is
revealing. The main effects ui(x i ) are not confounded, but the inter
action components are confounded with each other. For example,
 u(x i
o,Xj 0 ,y) o 1 1 1
u(x i ,Xj ,y) + u(x i ,Xj ,y) (39)
172
5. CONCLUSIONS
REFERENCES
~cat~ons,
Peter C. Fishburn
1. INTRODUCTION
The past decade has seen a dramatic increase in research on all
main areas of multiple criteria decision making, including
theory behind the model consists of the several assumptions made about
u and the criterion f~nctions, which themselves are marginal utility
functions, plus the presumption that more utility is better than less.
Assessment methodology enters through the specific procedures used at
each iteration to estimate local tradeoffs between criteria. Related
procedures may have been used prio~ to this step to assess the several
criterion functions.
The general formulation used for the survey is presented in the
next section. This is followed by a discussion of classificatory
attributes of the theories. Later sections are organized around a
threevalued attribute whose values correspond to the familiar
categories of decision under certainty (section 4), decision under risk
(section 5), and decision under uncertainty (section 6). Throughout
these sections I shall refer to various choice models when it seems
helpful to do so. However, to emphasize the distinction between
evaluation theories and assessment methodologies, the latter will
receive almost no mention in the main body of the survey. This
deliberate omission is partly rectified in the final section which
presents a brief review of assessment literature.
Several important topics are not covered in the paper, including
aspects of social evaluation and choice [Arrow (1963), Arrow and
Scitovsky (1969), Sen (1970), Fishburn (1973a)] and applications of
multicriterion decision theories [Johnsen (1968), Zeleny (1976a),
Keeney and Raiffa (~176)]. Additional discussion of issues in multi
objective problem forlnulation is provided by Chipman (1966), Johnsen
(1968), Wilkie and Pessemier (1973), Plott et al. (1975) and Keeney and
Raiffa (1976).
2. FORMULATION
Many writers, including MacCrimmon (1973), differentiate among
attributes, criteria, objectives and goals. Although I shall not adhere
to precise distinctions among these terms, it is useful to note some
differences in their usage.
Attributes are often thought of as differentiating aspects,
properties or characteristics of alternatives or consequences. Criteria
generally denote evaluative measures, dimensions or scales against
which alternatives may be gauged in a value or worth sense. Objectives
are sometimes viewed in the same way, but may also denote specific
desired levels of attainment (to climb Mt. Everest) or vague ideals (to
live the good life). Goals usually indicate either of the latter
notions. Although some writers make a careful distinction between
183
3. CLASSIFICATION OF THEORIES
This section identifies attributes that differentiate multi
attribute/multicriterion evaluation theories and indicates the classi
fication of theories that will be followed in ensuing sections.
A Basic Trichotomy
The main attribute that I shall use to classify evaluation
theories is the extent to which risk or uncertainty explicitly enters
the theory. This will be treated as a threevalued attribute whose
values are similar to the categories of decision making under certainty,
under risk, and under uncertainty (Luce and Raiffa, 1957).
The first of the three main categories includes evaluation
theories that do not explicitly use probabilities or uncertain events
in the evaluations. This category includes a large number of theories
of preference and utility (Luce and Suppes, 1965; Fishburn, 1970a;
Chipman et al., 1971). An excellent example in economic theory is
provided by Debreu (1959a).
The second main category encompasses theories that explicitly
involve probability or risk. This includes a number of multiattribute
theories (Fishburn, 1970a, 1977a; Farquhar, 1976b; Keeney and Raiffa,
1976) that are based on the von NeumannMorgenstern (1947) expected
utility theory. It also includes a variety of other models for
comparing gambles or risky alternatives (Rapoport and Wallsten, 1972;
Payne, 1973; Slovic et al., 1977; Libby and Fishburn, 1977; Fishburn
and Vickson, 1977).
The third category involves evaluation theories that explicitly
consider uncertain events or states of the world. The best known
theory for this case is probably the RamseySavage personalistic
186
Note here that if X is so sparse in X x ... xX that there are never two
1 n
ntuples in X that have the same values of Xi for all but one i and
have different values of Xi for the other i, then all Xi are trivially
independent with >i empty for each i. It is partly for this reason
189
1
(Yi,Xj,b) > (x ,Yj,b),
191
perhaps with one or both ~ being >. In well behaved Euclidean space
situations this implies that there are connected indifference curves
or regions in the xixX j subspace with fixed values of the other
variables. Although all the models discussed in the next several pages
usually have at least the minimal sense of compensatoriness noted
above, some of them will also be seen to exhibit noncompensatory
features.
The most familiar independent evaluative model is probably the
additive utility model that has u i : Xi + Re for i = l, ... ,n with
a.nd
u(x , ... ,x )
I n
so that ui(x i ) = wiP(x i ) for each i. This form arises naturally in the
timeperiod context with i denoting different periods. The equal
weights case (no time preference) arises from the additive model when
(XI'" .,xn ) is indifferent to (Xcr(I)'" .,xcr(n)) for any permutation cr
on {l, ... ,n} (Debreu, 1959b; Fishburn, 1970a). Another specialization
is axiomatized by Koopmans (1960) for the denumerableperiod setting.
This is the constant discount factor model u(x ,x , ... ) = La iI p(x i )
I 2
with 0 < a < 1. Other cases based on preference intensity comparisons
will be mentioned later.
The other special form is the weighted linear model
The second part of this condition implies the weighted linear model in
the context of Debreu's (1960) additive utility theory when each Xi is
a real interval with the relative usual topology.
The weights of the theories in the preceding paragraph are
arbitrary real numbers. Williams and Nassar (1966) present an
axiomatization that implies positive decreasing weights and is inter
preted in a cash flows context. Their key independence axiom, which is
similar to Aumann's, says that x t y iff x  y t (0, ... ,0). They
axiomatize a general model in which u(x) = x + a x + a a x +... +
(a a ... a)x with
2 3 n n
° 1 2 2 2 3 3
< a. < 1 for each i, and then show that an
1
additional temporal consistency axiom implies that all ai are equal.
Independent Compensatory Nontransitive Preferences
Of the two common forms of intransitivity in preference theory
nontransitive indifference and nontransitive preferencemore attention
has been given to nontransitive indifference. This is partly due to
the facts that nontransitive indifference is well suited to single
attribute situations, and that nontransitive indifference can be
accommodated in several appealing utility models for special types of
strict partial orders. The best known of these are semiorders and
interval orders (Armstrong, 1948, 1950; Luce 1956, 1973; Scott and
Suppes, 1958; Roberts, 1970, 1971; Fishburn, 1970b, 1970c, 1973c;
Mirkin, 1972). We say that> on X is a semiorder if and only if it
is a strict partial order that satisfies the following two conditions
for all x,y,z,w E X:
u (y )].
2 2
Noncompensatory Preferences
In discussing primarily noncompensatory evaluation theories I
shall assume for expositional simplicity that the set X of potential
things to which the relation > might apply is a product set
X xX x •• • xX . Since there seems to be no widely accepted definition
1 2 n
of noncompensatory>, I shall begin with a definition proposed in
Fishburn (1976a).
For each i E {l, ... ,n} let >~ be defined on Xi by
Note that >~ is different than >i defined earlier and is not predicated
on any notion of independence. We shall say that> is strongly
noncompensatory if and only if preference between any pair of ntuples
in X is completely determined by the two disjoint subsets of attributes
on which each is better than the other according to the >~. The
1
question "How much better?" is irrelevant for strongly noncompensatory
preferences.
Several aspects of this definition are worth noting. First, it
depends in no way on whether> is transitive. Second, it implies that
each X.1 is independent of the other attributes, with >io = >..
1
Hence
forth we write >i in place of >i. Third, it implies the strong
independence feature that holds for additive compensatory models,
namely that every I~{l, ... ,n} is independent of its complement. And
196
x > y iff not (xi i Yi) for some i, and xa(i) >a(i) Ya(i) for
and others are a case in point. The usages of the scoring functions gj
in these models strongly suggests a degreeofpreference orientation.
The basic theory of preferencedifference comparisons extends
from the ordered metric rankings of Coombs (1964), Siegel (1956) and
Fishburn (1964) through a number of theories (Frisch, 1926; Alt, 1936;
Suppes and Winet, 1955; Suppes and Zinnes, 1963; Pfanzagl, 1959) that
imply the existence of a real valued u on X such that
(x,y) >* (z,w) iff u(x)  u(y) > u(z)  u(w), for all x,y,z,w E X.
F >
I
G iff F(x) 2 G(x) for all x ERe,
F > G iff JXF(y)dy 2 JXG(y)dy for all x ERe.
2
7. ASSESSMENT METHODOLOGIES
In this final section I shall indicate briefly some of the main
themes of assessment methodologies and provide an introduction to its
literature.
Most of the assessment procedures that relate to the evaluative
theories surveyed in earlier sections are concerned with the estimation
of either subjective probabilities or utilities and/or criteria
208
Raiffa (1969) and Keeney and Raiffa (1976) extensively discuss the
multiplicative and other algebraic forms in the risky context of
section 5. Assessment procedures that do not necessarily presuppose
a decomposed form for a multiattribute utility function include
holistic procedures (Slovic and Lichtenstein, 1971; Fischer, 1977),
tradeoff methods (Thurstone, 1931; MacCrimmon and Toda, 1969; Mac
Crimmon and Siu, 1974), and approximate fits to pairwise assessment
data (Smith et al. 1974). Some specialized procedures designed for
interactive programming methods are discussed in the references in
the penultimate paragraph of section 2.
The additive utility form has been considered in the general
~ui format as well as in specialized forms that are available when each
REFERENCES
Ackoff, R. L. Scientific Method: Optimizing Applied Research Decisions.
New York: Wiley, 1962.
Adams, E. W. Elements of a theory of inexact measurement. Philosophy
of Science 32 (1965), 205228.
Agnew, N. H., Agnew, R. A., Rasmussen, J. and Smith, K. R. An
application of chance constrained programming to portfolio
selection in a casualty insurance firm. Management Science
15 (1969), B512B520.
Alderfer, C. P. and Bierman, H., Jr. Choices with risk: beyond the
mean and variance. Journal of Business 43 (1970), 341353.
Alt, F. Uber die Messbarkeit des Nutzens. Zeitschrift fUr National
okonome 7 (1936), 161169.
Armstrong, W. E. Uncertainty and the utility function. Economic
Journal 58 (1948), 110.
Armstrong, W. E. A note on the theory of consumer's behavior.
Oxford Economic Papers 2 (1950), 119122.
Arrow, K. J. Social Choice and Individual Values. New York: Wiley,
1963.
Arrow, K. J. ASiects of the Theory of Risk Bearing. Helsinki: Yrjo
Jahssonin S litiS, 1965.
Arrow, K. J. and Scitovsky, T. (eds.) Readings in Welfare Economics.
Homewood Illinois: Irwin, 1969.
Aumann, R. J. Utility theory without the completeness axiom.
Econometrica 30 (1962), 445462.
Aumann, R. J. Utility theory without the completeness axiom: a
correction. Econometrica 32 (1964a), 210212.
210
erationnelle 5
Libby, R. Man versus model of man: the need for a nonlinear model.
Organizational Behavior and Human Performance 16 (1976b), 2326.
Libby, R. and Fishburn, P. C. Behavioral models of risk taking in
capital budgeting. Journal of Accounting Research (1977).
Lichtenstein, S. Bases for preferences among threeoutcome bets.
Journal of Experimental Psychology 67 (1965), 162169.
Lichtenstein, S. and Slovic, P. Reversals of preference between bids
and choices in gambling decisions. Journal of Experimental
Psychology 89 (1971), 4655.
Lintner, J. The valuation of risk assets and the selection of risky
investments in stock portfolios and capital budgets. Review of
Economics and Statistics 47 (1965), 1337.
Lorentz, G. G. Approximation of Functions. New York: Holt, Rinehart
and Winston, 1966.
Luce, R. D. Semiorders and a theory of utility discrimination.
Econometrica 24 (1956), 178191.
Luce, R. D. A probabilistic theory of utility. Econometrica 26
(1958), 193224.
Luce, R. D. Individual Choice Behavior. New York: Wiley, 1959.
Luce, R. D. Two extensions of conjoint measurement. Journal of
Mathematical Psychology 3 (1966),348370.
Luce, R. D. Jhree axiom systems for additive semiordered structures.
SIAM Journal on Applied Mathematics 25 (1973), 4153.
Luce, R. D. Lexicographic tradeoff structures. Mimeographed, Harvard
University, 1977.
Luce, R. D. and Krantz, D. H. Conditional expected utility.
Econometrica 39 (1971), 253271.
Luce, R. D. and Raiffa, H. Games and Decisions. New York: Wiley,
1957.
Luce, R. D. and Suppes, P. Preference, utility and subjective prob
ability. In Luce, R. D., Bush, R. R. and Galanter, E. (eds.),
Handbook of Mathematical Psychology, Vol. III. New York:
Wiley, 1965, 249410.
Luce, R. D. and Tukey, J. W. Simultaneous conjoint measuremellt: a
new type of fundamental measurement. Journal of Mathematical
Psychology 1 (1964), 127.
MacCrimmon, K. R. An overview of multiple objectiv~ decision making.
In Cochrane, J. L. and Zeleny, M. (eds.), Multiple Criteria
Decision Making. Columbia, South Carolina: University of South
Carolina Press, 1973, 1844.
MacCrimmon, K. R. and. Siu, J. K. Making tradeoffs. Decision Sciences
5 (1974), 680704.
MacCrimmon, K. R. and Toda, M. The experimental det'ermination of in
difference curves. Review of Economic Studies 36 (1969), 433451.
Machol, R. E. and Lerner, E. M. Risk, ruin, and investment analysis.
Journal of Financial and Quantitative Analysis 4 (1969), 473492.
Mao, J. C. T. Survey' of capital budgeting: theory and practice.
Journal of Finance 25 (1970a), 349360.
Mao, J. C. T. Models of capital budgeting, EV vs ES. Journal of
Financial and Quantitative Analysis 4 (1970b), 657675.
219
T. Gal *
1. Some Notation
2. A Method for Determining the Set of all Efficient Solutions
to a Linear· Vectormaximum Problem (LVMP) [ 1]
3. Nonessential Objective Functions in an LVMP [2]
4. Postefficient Analys~s [3]
5. Fuzzy Programming and MCP [ 4]
6. How to Deal with Degeneracy [ 5]
7. Generalized Saddle Point Theory of Mep [6 ]
1. SOME NOTATION
n
Ax ~ b 1:
j =1
a .. x.
~J J
lO bi' i = 1, ... , m
(1) <)
x 0: 0 x.
J
0: 0, j = 1, ... , n
(2) X = {x E Rn Ax ~ b, x ~ O} '# 0
Introduce
n
Ay =b L: a .. x. + x . = b 1• all i
j =1 lJ J n+l
(3) <>
Denote
( 4) x= {y E IR n +m I Ay = b, Y ;;; O}
(From X i 0 follows X i 0)
j 1 jm ji 
Bs = (a , ... , a ), a columns of A. The matrix Bs is uniquely
characterized by the basisindex
Denote
(5)
Set YN = 0; then
Let c k E ~m+n such that c~ =0 for all j = n+l, ... , n+m, and for
J
each k E {1, ... , K}, and let
1 K
(8) z(y) (c, ... , c ) ,
i.e.
(9 ) Z(y)
The set
(11)   t 
E = {y E X l y E X such that CT y ;;: CTy and CT y # CTy },
is the set of all efficient solutions to (10).
(12) max
y E X
For the sake of simplicity and brevity, no special cases are dealt
with in this paper (unboundedness, degeneracy).
Let
S S S
X (ys) = y(y 1 , ... , yS) = { Y E X I Y = 1: asy
s 1: as = 1,
s=l s=l s=l
as ~ 0 for all s}
1 S
be the convex hull of y , ... , y
Denote finally
Fig. 1.
230
Z
Z(P)
Fig. 2.
Fig. 3.
231
o
List: = { P2' P5} , Yo = { tl }.
Y7 = {t~, t~, t~, t§, t~, t~, t4' t~, t~, t~, t~}
Fig. 4.
232
E(Z) = E(Z")
K
max 1: tkzk(x) , and
x E X k=l
k;ir
233
K( C I )
c2
z5 c3 c
4 __ 
~~/
+__________________________L__ ~ c1
x
1
Fig. 5.
234
',:1 4 6
c c2 c3 c c5 c c7
5 1x 1 9 8 4 1
4 1 4 5 5 5 2
5 1 1 9 8 4 1
9x 0 3 4 3 1 1
0 1 2/3 61/9 x 19/3 41/9 14/9 (i)
1 0 1/3 4/9 1/3 1/9 1/9
0 9/61 1 57/61 (ii )
1 4/61 0 5/61
From Table (ii) of this tableau follows that the objective functions
z2(x) and z5(x) are nonessential and a minimal spanning system is in
.
thls 
case C = ~,c 1 , c 4 }.
Another example:
c1 c
2
c3 c
4
1x 1 2 3
2 1 1 2
1 1 2 3
0 1 _3 x 4
1 1/3 0 1/3
0 113 1 4/3
235
4. POSTEFFICIENT ANALYSIS [, ]
"max" Z(y, u)
y E X
R =n R
sE S S
Set R need not to be connected. This follows from the fact that in
determining Rs ' s E S , we are faced with a problem when parameters
appear in the coefficient matrix.
V£ E.5;1)
Fig. 6.
237
j~~
l~~
L _______ _
Fig. 7.
{:
i f Ax ~ band 2 ~ cx is strongly viola
ted
f(Ax)
i f Ax ~ band 2 ~ cx is satisfied
~ r:
~
Note:
s.t. xl + 3x 2 ~ 21
xl + 3x 2 :0 27
4xl + 3x 2 :> 45
3xl + x 2 ~ 30
xl ~O, x2~ 0
(see Fig. 8) •
1 2 3 5 6 7 8 9 10
Fig. 8.
240
i f z1(x) ::> 3
z1 (x) + 3
1l 1 (x) if 3 < z1 (x) ::> 14
( °1 17
i f z1(x) > 14
if z2(x) ::> 7
i f z2(x) > 21
max A
s.t.
..
><
242
o
.
,..,
bo
.
.....
rz.
N
243
s
P = {p is I i = 1, .•. , k, k > 1 } .
F ig , 14
246
G(x,D) = Ctx + DCbAx) be the Generalized Lagrangian for (5) and (6).
Then we have the following statements:
247
Theorem: i) °
L(x,u) has a generalized saddlepoint (x ,uo) in
(x,u) <: 0 iff
°
x "solves" (1) with some DO,y ° iff
°
u "solves" (2) with some DO,Vo iff
°
x "solves" (3) for some y ° iff
UO "solves" ( 4 ) for some v °
ii) G(x,U) has a generalized saddlepoint (xo,Uo) in
x <: 0, u vtU <: 0 iff
v >0
r: v.l =1
°
x I!solves" (5) iff
UO "solves" (6) .
References:
[1] Gal, T.: A General Method for Determining the Set of All
Efficient Solutions to a Linear Vectormaximum Problem.
European Journal of Operational Research forthcomming
ABSTRACT
Let 0 denote a set of N entities and D = (d kl ) a matrix of dissimi
larities defined on OxO. The diameter of a partition of 0 into M
clusters is defined as the maximum dissimilarity between entities in
the same cluster, and the split of such a partition as the minimum
dissimilarity between entities in different clusters. A partition
of 0 into M clusters is called efficient if and only if there is no
partition of 0 into not more clusters with smaller diameter and not
smaller split or with larger split and not larger diameter. A grap~
theoretic algorithm which allows to obtain a complete set of effi
cient partitions is described. Then are presented some experiments,
designed to evaluate the potential of bicriterion cluster analysis
as a tool for the exploration of data sets, i.e. for detecting the
underlying structure of 0, if and when it exists. Both real data
sets on psychological tests and on stock prices, and artificial da
ta sets are considered. The ability of bicriterion cluster analysis
to detect the best clusterings in many cases and to show whether or
not there are some natural clusterings is clearly evidenced.
1. INTRODUCTION
Cluster Analysis [1] [4] [10] [12] [19] is concerned with the very
general problem of grouping the entities of a given set into homoge
neous and wellseparated subsets, called clusters. To define a par
ticular cluster analysis problem it is necessary to specify the desi
red type of clustering  e.g. partition, covering or hierarchy of
partitions  and to make precise the concepts of homogeneity and se
paration. This can be done in many ways. Indeed, quite a lot of
literature has focused upon cluster analysis problems; it has sug
gested some exact algorithms as well as a large number of heuristics.
Most often, though, only homogeneity or sometimes only separation
250
of the clusters is ~aken into account. When both criteria are con
sidered, it is usually only a posteriori, to evaluate the qualities
of the clusters which have been obtained. A truly bicriterion ap
proach, providing a set of efficient clusterings, seems more adequa
te in the many situations in which the tradeoff between homogeneity
and separation is of interest.
In [6] [7] [8], such a bicriterion approach has been proposed for
partitioning the given set of entities with bottlenecktype criteria
for both homogeneity and separation. Thus, the values of the two
criteria depend on the maximum or minimum dissimilarity between
pairs of entities in the same or in different clusters. The results
obtained are summarized in the next section.
Cluster analysis has various purposes, the main ones being:
a) Classification. i.e. clustering to summarize information on large
sets of entities.
b) Prediction. i.e. clustering in order to be able to assign easily
new entities to one or another of the clusters obtained, and to pre
dict their properties from those of the entities of that cluster.
c) Organization. i.e. clustering for operational reasons.
d) Exploration. i.e. clustering in order to reveal the underlying
structure of the given set of entities, if and when such a structure
exists.
Clustering for exploration is often a useful first step in the ela
boration of scientific theories : the individual clusters may sug
gest concepts and the clusterings may suggest hypotheses about the
given set of entities. The clusterings also make it possible to e
valuate, usually in an informal way, the plausibility of given hypo
theses or theories about the entities under study or about the popu
lations they come from.
The main and largely unsolved problem is that of being able to dis
tinguish between cases in which a clustering or individual cluster
corresponds to some structure of the given set of entities (or, more
precisely, of the data on that given set) and other cases in which
it is only a meaningless result automatically extracted by the algo
rithm. A related and also difficult problem is to determine which is
the "best" number of clusters.
Some interesting attempts have been made by Ling [15], Ling and Kil
lough [16], Hubert [11], Baker and Hubert [2] [3] and others to give
a formal answer to the question of the significance of a clustering.
The results obtained are based on random graph theory and some of
251
thus verifies
...• C~} verifying for some nonnegative integer p < M. d(C k ) = d(C~)
for k = 1. 2 •..•• p and d(C p +1 ) > d(C~+l)'
Let us define the split s(P M) of a partition PM as the minimum dissi
milarity between entities in different clusters of PM' A maximum
split partition PM of 0 into M clusters thus verifies
(1) The graph theory terminology used in this paper is in accordance with
that of "Graphs and Hypergraphs" by C. Berge [5].
254
this result that the maximum split partitions PM of 0 are those which
are given by the wellknown singlelink hierarchical clustering al
gorithm [13]. It is also clear that the split s(P) of a partition P
will be greater than or equal to the kth of its N1 possible values
(assuming no ties) if and only if both endvertices belong to the sa
me cluster for each of the k1 smallest edges of the minimum span
ning tree of G. Using this remark and the concept of reduced graph
an efficient algorithm for bicriterion cluster analysis can be ob
tained [7]. The minimum diameter partitions P~ and maximum split par
A
the smallest (ds) /d m, for partitions into less than M clusters and
into M clusters are noted when positive. The differences~(d/s) defi
256
ned analogously are also noted. For both these criteria, the only
efficient partition 61 into 6 clusters appears to be the most inte
resting. This is confirmed by the position of 61 on the diameter
split map : a large decrease in diameter between 51 and 61 is obser
ved with a small decrease in split.
The names of the tests, the partition into 5 clusters obtained by
Harman with his Bfaatop method and partition 6 1 are given in table
2. Harman associates factors, also noted in table 2, with the first 4
clusters obtained; two factors are associated with cluster 4 and none
with cluster 5. In partition 6 1 both these clusters are divided, clus
ter 4 into 2 clusters, noted 5 and 6, corresponding to the two fac
tors of Harman and cluster 5 into 2 parts aggregated to Harman's
clusters 2 and 3 (clusters 3 and 4 of 61 ), The similarity of the na
mes of tests 20, 22 and 23 with those of Harman's cluster 2 (e.g.
comprehension, deduction and reasoning; sentence completion and se
ries completion) and of the names of tests 21 and 24 with those of
Harman's cluster 3 (Le. addition, code, counting dots, numerical
and arithmetical puzzles) is worth noting. As the precise content
of the tests is not described in Harman's book, any deeper interpre
tation of the results must be left to psychologists.
257
1.01
0.942 21
.23 • 22
0.875 ·24 31
 32
34  33
0.809 35
 41
~42  51
0.743
52
61
0.676 ?1
eS1
10.1.9102
1
0.610 104 103
0.543
0.477
s ...
0.410 ,. ,.
0.277 0.371 0.464 0.558 0.652
259
1. Visual Perception 1 1
2. Cubes 1 1 Spatial
3. Paper Form Board 1 1 Relations
4. Flags 1 2
5. General Information 2 3
6. Paragraph Comprehension 2 3
7. Sentence Completion 2 3 Verbal
8. Word Classification 2 3
9. Word Meaning 2 3
10. Addition 3 4
11. Code 3 4 Perceptual
12. Counting Dots 3 4 Speed
13. StraightCurved Capitals 3 4
20. Deduction 5 3
21. Numerical Puzzles 5 4
22. Problem Reasoning 5 3
23. Series Completion 5 3
24. Arithmetic Problems 5 4
260
The second data set studied concerns stock price behaviour for 63
securities, and is given in a paper by King [14]. This author uses
cluster analysis to test the hypothesis of existence of sectorial
factors which explain stock prices after extraction of a market fac
tor. To this effect the hierarahiaaZ aentro!d aZustering method is
applied to the matrix of residual correlations between the time se
ries of monthly stock prices from May 1927 to December 1960. The
list of securities, the 6 sectors to which they belong, and the par
tition into 6 clusters obtained by King are given in table 4.
The same dissimilarity as for the problem of Harman was used when
applying bicriterion cluster analysis. The characteristics of the
efficient partitions into 2 to 10 clusters of a complete set are gi
ven in table 3 and the corresponding diametersplit map is represen
ted on figure 2. It is seen that partitions 51 and 61 appear as the
most interesting ones there is only one efficient partition into 5
clusters and one into 6 clusters, and both 51 and 61 correspond to
large values of 6(ds) / dm and of 6(d / s). The clusters of these
partitions are also listed in table 4.
Partition 51 agrees with King's hypothesis for the sectors of petro
leum, metals and rails and partition 6 1 for the utilities sector as
well. The securities from the tobacco and stores sectors are mixed;
2 of them were also misclassified by the centroid method. This sug
gests some common factor could explain the prices behavior for these
2 sectors. Partitions 61 appears to be more strongly established
than 51 as the corresponding graph Gt contains 1217 edges against
655 edges for the Gt of 51' For 61 all residual correlations bet
ween stock prices of securities within the same cluster are (almost)
positive. Both efficient partitions 51 and 61 have smaller diame
ters than King's partition into 6 clusters, for which d = 1.000561
and equal splits. That partition is therefore not efficient. King
also notes that the heuristic centroid clustering algorithm does
261
41 211
..
1.000611 0.998579 1.002035 0.000164 0.00203l: 0.000164
42 276 1.000542 0.998311 1.002235 0.002231
43 331 1.000484 0.997706 1.002784 0.002778
44 441 1.000398 0.996971 1.003437 0.003427
):
51 655 1.000282 0.998579 1.001705': 0.00033d: 0.001703 0.000329':
61 1217 1.000001 0.998579 1. 001424': 0.000281 0.001422': 0.000281
71 1290 0.999956 0.998579 1.001379': 0.000045 0.001377': 0.000045
81 1433 0.999863 0.998579 1.001286': 0.000093 0.001284" 0.000093
91 1535 0.999756 0.998579 1.00179': 0.000107 0.001177': 0.000107
101 1550 0.999735 0.998579 1.001158': 0.000021 0.001156': 0.000021
102 1572 0.999716 0.998522 1.001196 0.001194
262
d I'
1.20
• 21
1.14
_ 23• 22
• 31
1. 09
.
33 • 32
35 34 • 41
42
1• 04 44
0.988
0937
0.1£5
0.833
0.781
0.729
0.678 ,.
0.697 0.761 0.826 0.890 0.954
263
Metals

23. Republic Steel 3 3 3
24. American Smelting and Ref. 3 3 3
25. American Steel Foundries 3 3 3
26. Bethlehem Steel 3 3 3
27. Calumet and He cia 3 3 3
28. Inland Steel 3 3 3
29. Inspiration Cons. Copper 3 3 3
30. Interlake Iron Corp. 3 4 4
31. Mag}ll8. Copper 3 3 3
32. U.S. Steel 3 3 3
33. Vanadium Corp. of America 3 3 3
264
109
·21
.24 .23 22
97.9
87.1
76.4 • 32
.41
:42
51 .52
65.7
44 <54
.47 .46 .45
55.0
.610
611
44.3 81 •71
n
74 ... :82
~1
86 .85.

92
1{)1
33.6
103 _e102
elCij
22.9
12.1
s
1.53 6.11 10.7 15.3 19.9
268
~c
21 1250 68.2 56.8 1.20 0.20
31 1380 64.4 40.0 1.61" 0.42
41 2092 19.4 36.7 0.53:: 0.30
5. CONCLUSIONS
map.
c) Several indications help to estimate which is (or are) the best
efficient partition(s) when the data possesses some structure : 1
or 2 efficient partitions for that M, small values for (ds)/dm and
for dis among the efficient partitions into M clusters, large values
for ~(ds)/dm and for ~d/s, gap in the diametersplit map.
Further experiments will perhaps suggest more refined formulae to
estimate which are the best partitions, e.g. formulae taking into
account the number of clusters, the dimensionality of the data andl
or the type of dissimilarity used. Substantive analyses with data
from various fields are also needed to see how much insight the set
of efficient partitions provides, from the practitioner's point of
vue.
REFERENCES
H. Isermann
Fakult~t fur Wirtschaftswissenschaften
Universit~t Bielefeld
ABSTRACT
The paper relates three duality concepts in multiple objective
linear programming  the concepts of GaleKuhnTucker, Isermann and
Kornbluth  to each other and indicates some decisionoriented impli
cations of duality.
1. INTRODUCTION
Duality concepts in multiple objective linear programming were de
veloped for the first time by Gale, Kuhn and Tucker [2] as early as
1951. They considered a pair of general matrix problems of linear pro
gramming, i.e. a linear programming problem with a matrixvalued linear
objective function, and established some theorems of duality and exist
ence. As the matrix problems of linear programming contain the linear
programming problems with a vectorvalued as well as a scalarvalued
objective function as special cases the developed theory comprises the
respective theoretical framework for vector problems of linear pro
gramming as well as for ordinary linear programming problems. Schon
feld [11] slightly supplemented this duality concept. He also extended
the duality concept of G"ale, Kuhn and Tucker to multiple objective non
linear programming problems [12].
Kornbluth [8] analyzed a dual pair of linear homogeneous parametric
vector problems of linear programming. His duality statements were
supplemented by Radder [10] who also imbedded this duality concept in
to a generalized saddlepoint theory. A further duality concept was ela
borated upon by Iserman [5,7].
The purpose of this paper is to relate the different duality con
cepts to each other and to show how duality may be employed in order
to "solve" a multiple objective linear programming problem.
Before going further, for convenience, let us introduce the follow
ing notation: R denotes the set of the real numbers, Ro the set of the
nonnegative real numbers and R+ the set of the strictly positive real
numbers. Let both G and H be em x n)matrices. With regard to matrix
inequalities the following convention will be applied:
275
The main results of Gale, Kuhn and Tucker which are of interest in this
context are stated in the following theorem:
Theorem 1: Consider the probtems (1) and (2).
(i) (1) has an effiaient sotution. if and onty if. (2) has an effi
276
aient soZution.
ii) Let (xO,yO,Do) be an effiaient soZution fop (1). Then thepe ex
ists an effiaient soZution (uC,v*,D*) fop (2) suah that DO = D*.
An anaZogous statement hoZds fOP (2).
:iii) If (xO,yO,Do) is an effiaient soZution fop (1). then Cxo = DOyo.
An anaZogous statement hoZds fop (2).
(iv) Let (xO,yO,Do) and (uo,Vo,Do) be feasibZe soZutions fop (1) and
..
(2). pespeat~veZy. w~th Cx ° = D°Y°• BT ° Then (x0 ,y °,D°)
u o=oDT v.
and (uo,vo,Do) ape effiaient soZutions fop (1) and (2). pespea
tive Zy.
k
°
t v ~u. ~
~=1 J
u.°
J
(j = 1, ... ,m) ,
m
t b.u.~ dO (~ = 1, ... ,k).
j =1 J J ~
The following theorem states the close relation between the problems
(7) and (8) and the pair of matrix problems of linear programming (1)
and (2).
Theorem 4: Consider the problems (1) and (2) as well as (7) and (8).
(i) (XO,yo) is an efficient solution for (7), if and only if, there
exists a(k x r}ma~rix DO such that (xO,yO,Do) is an efficient solu
tion for (1);
(ii) (uo,vo) is an efficient solution for (8), if and only if, there
exists a(k x r~matrix DO such that (uo,vo,Do) is an efficient solu
tion for (2).
Proof. Let (xO,yO,Do) be an efficient solution for (1) and assume, to
the contrary, that (xO,yo) is not an efficient solution for (7). Then
there exists a feasible solution (x' ,yo) such that Cx' ~ Cxo. Let
i' E {1, ... ,k} be such that c ,x' > c ,xo where c , denotes the i'th
row ~ector of C. Then (x' ,y ° ,D')
i with i d' = d° ,for
i all i = 1, ... ,k
iq iq °
and all q = 1, ... ,r such that (t,q):j: (i',q') and d'i'q' = dt'q' +
cT
t'
x' _ c T ' x °
i is because of Cx' ~ D'Yo a feasible solution for (1)
°
yq'
which, however, leads to the contradictory inequality D' ~ DO.
Let (XO,yo) be an efficient solution for (7). Then according to state
ment (ii) of Theorem 2 there exists a (k x m)matrix UO such that the
UOAw < Cw, w E R~ has no solution w, which implies
n
~ Cx for no x E Ro '
~ Cx for no (x,y) E {(x,y) I Ax = By, x E R~, Y E R~},
279
c o o.
1
With respect to F this multiple objective simplex tableau can be
transformed into
(10)
o. 0 1 0
Let x wlth xF = F b, xN = 0 be a feasible basic solution for the pri
mal vector problem (5), which is also dual feasible, i.e. for UO = CFF 1
the system UOAw < Cw, w E Rn has no solution w. Then because of
~1 0 0
Cx o = CFx~ = CFF b = U b either solution is efficient for the re
spective vector problem of linear programming and the multiple
objective simplex tableau could be written as
(11)
Let us depart from the multiple objective simplex tableau (11) in order
to see that the dual feasibility of a feasible solution for the primal
problem (5) immediately implies the efficiency of this solution. From
o n
U Aw < Cw for no w E Ro
follows immediately
1 n
eFF b ~ ex for no x E Ro such that Ax b
and hence
exo < Cx for no x E R~ such that Ax = b.
Thus a sufficient criterion for a feasible basic solution x O for (5) to
be efficient is its dual feasibility, i.e. the associated matrix
o 1
U = CFF has to be feasible for (6).
o 1
Theorem 5: Let x be a feasible basic solution for (5). If (CFF A C)w
~ 0 for no w E R~. then xO is efficient for (5).
Hence the multiple objective simplex method [1,13,6] can be seen as
an approach that seeks at first feasibility for the dual problem while
maintaining feasibility in the primal problem. As soon as feasible
solutions for both problems have been determined, an initial pair
(xo,Uo) of efficient solutions is at hand such that exo = UOb. The
281
(uo(ai,al,···,ai_l,ai+l,···,an) 
nl
(ci,cl, ... ,ci_l,ci+l, ... ,cn))w ~ 0 for no w € R x Ro' (12)
In order to determine all indices i for which (12) holds, a se
quence of linear programs with k constraints may be solved [6,15].
Applying Theorem 6 to the multiple objective simplex tableau of the
current efficient basic solution the decision maker will identify all
nonbasic variables that are efficient variables in the above sense and
thus lead to adjacent efficient basic solutions. Obviously, if x O is an
efficient basic solution for (5) which is dual feasible for (6), and if
(12) does not hold for each index i of a nonbasic vector a i of A, then
282
p  p
c = r a. C. (ra. =l;a. ~O(r=l, .•. ,p))
r=l 1r 1r r=l 1r 1r
I B
c o
with B being an (m x r)matrix and ° °
below B being a (k x r) zero matrix.
1
With respect to F this multiple objective simplex tableau can be
transformed into
(14)
programming as well.
If we want to determine all DO which are maximal for (1) we are
firstly interested to determine an initial D which is maximal for (1)
or to make certain that problem (1) has no efficient solution.
Theorem 10: The foLLowing statements are equivaLent:
(i) Both (1) and (2) have an effiaient soLution;
(ii) the biLinear program
T T
min {g = uBy I uA  v C ~ 0 , y ~ 1, v ~ 1} (16)
Let J denote the index set of all Dj = CFj(F j )lB which are maxi
mal for (1). Then a multiparametric version of a multiple objective
simplex method [1,13,6] can be applied to determine all Dj (j E J), as
the following theorem obviously holds:
Theorem 11: Let E = {D j I j E J}, and L = {(Di,Dj) I Di and Dj are
adjaaent (i,j € J)} and G = (E,L) the undireated soLution graph assoai
ated to (1). Then G is finite and aonneated.
References
1. Evans, J.P., and R.E. Steuer, A Revised Simplex Method for Linear
Multiple objective Programs, Mathematical Programming, Vol. 5,
5472 (1973).
2. Gale, D., Kuhn, H.W., and A.W. Tucker, Linear Programming and the
Theory of Games, in: T.C. Koopmans (ed.), Activity Analysis of
Production and Allocation, 317329, John Wiley & Sons, New
York, 1951.
285
Summary
The present study was initiated as a consequence of critical condi
tions for many small Danish firms.
The small firm in Denmark averages about 15 employees. It is normal
that the manager is the owner and the key person in the firm.
It is characteristic that the development of the firm and the develop
ment of the owner/manager is parallel: the start period with the
creative and developmentoriented manager, the growth period with
the adaptationoriented manager and the stagnation period with the
controloriented manager.
The crisis for the firm is a personal crisis for the owner/manager.
The environment has changed and demands changes in the structure and
function of the firm. But the manager has forgot then how to adapt
and develop, he has been trapped in administrative work for several
years.
Multiobjective management in this situation consists of "help" to
develop the manager himself by establishing a searchlearning process
that enables him to focus on the necessary and sufficient set of
objectives that he and his organization should try to attain in order
to survive and expand.
Based upon a general searchlearning model some empirical models are
developed in firms. The multiobjective point of view is an important
element herein.
One reason that a man owns his own firm is that he want to control
his own activities. He wants to be himself, he wants to be relatively
independent. He also wants to make money and build capital. This is
at least what people say when questioned as to why they have their
own small firm instead of working for other organizations.
The owner is responsible according to the law. The firm's economy is
identical to the owner's personal economy.
Several requirements are put to the owner in his role as a manager.
One demand is that he should oversee the total system. That is he
must know about purchasing, inventory, production, sales, finance,
personnel, trade organizations, relations to public authorities, etc.
This functional overview should be stored in his brain.
It is normally also required that he must have technical insight in
the products, the production processes, and many of the specific
functions in the firm.
It is demanded that he should be a technician, a lawyer, an economist,
and an administrator,in spite that he normally has no specific know
ledge of the normal functions in a firm, he is normally selfeducated
and often an educational process based upon experience and upon a
formal education in handicraft.
It is also desirable that the manager has some views upon the future,
foresight. According to the stakeholder model he should know about
what in the future is desired by the employees, the customers, the
vendors, the sources of finance, the trade organizations, and the
288
Managerial objectives
Environ
Development Philo ment Strategist
sopher Sensor
"Super
Admini ·visor", Seller of
Control strator consultant experimental
(decision process ideas
maker) confl ict
Managerial
Analysis/ Inter Search means, pro
Synthesis action learning blem sol ving
Often the small firm is started by the owner when he is in the age
of late 20s or early 30s. He has a desire to become on his own, he is
willing to run a risk, he starts, he is a pioneer, he has an idea of
what he is going to make a living from. This is a state of development
which in principle requires philosophizing and planning, learning what
customers desire from the firm and its products, and a strategic
planning and management. Usually all this is done in one stroke by
the starter: He has no formulation of the objectives, he has no stra
tegy and his strengh is identical to his weakness.
If it runs, the firm will increase from one or two persons to several
hundred per cent more as far as employees are concerned. The firm is
in a situation of adaptation to the environment, especially the
customers' like of products and therefore the central person is faced
with a growth process. This growth is again based upon ongoing inno
vation in products and markets according to spear head theory. In
this adaptation period the manager is using budgets, he produces
ideas for product development, he has good customers' relations and
he is aware of relations to workers' unions.
The third step is a consolidation period. Now the key person is ad
ministering his firm, he is trying to control daily operations and
he is trying to balance inducements and contributions from the stake
holders. He is burried in administration, he is interested in the
physical production processes (the logistics in general). He is also
aware of the demand for effectiveness, he is aware of the social
emotional relations to his employees, and he is aware that he must
motivate his people.
In this state of a firm it runs a risk to face a crisis because the
key person has forgot how to "start" again and he has forgot the hard
291
process of adaptation. In the lucky cases a crisis will not occur but
the key person will feel problems which we according to exhibit 2.1
can describe as control problems, adaptation problems, and development
problems.
Stated in multiobjective language the firm represented by the key per
son will desire to attain three sets of objectives: operational con
trol problems in stable environments, adaptation objectives according
to changes in the requirements from the environments, and development
objectives defined as the desire to change the environments in such a
way that the firm can function better in its surroundings, is better
shaped for its strategic function in society.
In order to describe the various problems we select a model of the
firm acoording to which the problems are described as "internal". It
is simply a manmachinemanagement systems model.
Re control
The problems in the man side of the manmachinemanagement system is
socialemotional relations, awareness of effectiveness and personal
motivation. A small firm should be looked upon and function as a nor
mal human group or maybe a few basic groups and if they do not func
tion according to what we know about a group life it causes problems.
On the machine side of the system we are faced with ongoing adjust
ments, we are faced with good or bad supervisorship by the key person,
we are faced with profit questions in relation to product, customers,
and capital allocation. We are faced with the normal internal infor
mation and communication problems, cooperation with other firms, and
stake holders, and we are faced with ongoing investment problems.
The key problem on the management side is nonawareness of the manage
rial role. The key person will often experience his own managerial
problems as simple marketing problems.
Re adaptation
The main and overwhelming problem in the man side of the system is as
far as adaptation is concerned the generation shift. The tax laws
makes it difficult to transfer ownership in a way that does not re
quire a lot of liquid capital.
On the machine side the problem is that state and local authorities
pass new laws and regulations based upon what politicians think is
useful primarily for the workers and for people living in the local
292
Re development
Development problems are primarily problems related to the managerial
side of the manmachinemanagement system. It is a question of strate
gy: what is our business and what should it be and what are our stra
tegic objectives, what are our strategic means and what is the envi
ronment in which we are going to attain our strategic objectives given
our conception of our strategic means. Usually the key person is not
at all able to answer these questions and he is not able by his own
ideas to conduct neither a qualitative strategic analysis nor a quan
titative strategic planning.
The personal strength and weakness of the key person is of decisive
importance for the development. When he started he was strong, as he
becomes older we are often faced with the fact that he is not apt to
start over again. It is considered too expensive to hire "the right
man" as a companion. Therefore a cheaper "mirror" of the owner is
eventually hired.
Awareness of the manager role is important for managing developments
as far as the managerial role is defined as a goal directed interaction
with other people.
Another difficulty for the development is time and capacity in terms
of resources and motivation. Finally we have found that it can be
difficult for a person to make decisions alone and all the time be
faced with responsibility for every main movement taken by the firm.
293
r action ~ group(s) ~
search indi .
vidual enV1ronment
~ ~
•
reaction
world conception
individual collective
reaction synthesis
model matching
promtness of reaction
} collective se",eh
sporadic pseudo
"explorative
search searcn search ... search
p" ill
""
Ol
/
/
(0 stimulation change/of. / / , change of I change of I }
for changes man <OAr,," man. total system
conlqu f'~", "' II t·
co ec Ive learning
I ineffective spor, dic ' '  ) planned fast, power ~
man. of charlge of '6Qange based change
change "hO\!; parts "0
These three sets of objectives should be kept in mind all the time
and should be attained simultaneously or maybe in a sequence in which
a different attention is payed to the various objectives. It could
be, for example, that the development objective requires more atten
tion in a certain period than for example the adaptation objective.
It is characteristic that every owner/manager formulates his own
objectives when he is exposed to the question as to whether he has
objectives or not and when he is asked to formulate objectives.
Donald L. Keefer
ABSTRACT
This paper describes a decision analysis approach to resource
1. Introduction
in [12].
The literature from organization theory [3] points this out, as does
A number of other recent studies have also proceeded in this manner: e.~,
theory have been in the public sector, this work was motivated
3. Analytical Approach
ness, R = {Rl, R2, ... , Rn} is defined to measure the degree to which
1
should be chosen that maximizes the expected utility:
E[u(rix)] = u(r)f(rix)dr, ( 1)
Equations (2), (3), and (4) define the feasible region, and
the policy x* satisfying restrictions (2), (3), and (4) that maximizes
utility function u(r) and the conditional joint density function f(rlx)
the budget allocation for new product research. In fact, such inde
decision variables.
following notation:
vided that the attributes are chosen judiciously  e.g., see the dis
cuss ion in Keeney and Raiffa [191. In particular, the following theorem
den t 0 f R.. for a 11 j t i, and R. i s uti 1 i ty i nde pen den t 0 f R., the n
1J 1 1
either
n
u ( r) L kiui(ri) (6 a)
i =1
or n
1 + Ku(r) = n [1 + Kkiui(r i )), (6b)
i =1
306
where u and the u. 's are utility functions scaled from zero to one,
1
the ki's are scaling constants with 0 < ki < 1, and K > 1 is a nonzero
scaling constant.
When t6a) or (6b) holds along with (5), the resource allocation
E[utr x)] = [k u (x )
i=1 i i i
or
1
= 1
Ri
u. (r. )f. tr.i~. )dr.,
1 1 1 1 1 1
1, 2, ... , n.
+
The function ui(x i ) defined above will be called the ith one
bles. Notice that the information required for each odeuf is independ
to management.
appearing in (5) must be known for each value of xi. Although in some
which f.(r.
1 1
Ix.)
1
is not assessed. The nature of the interpolation
given below.
308
between the increased accuracy obtained from additional data and the
time and effort required to obtain it. Perry and Greig [24] suggest
the mean that was developed empirically by Pearson and Tukey [23] can
tribution: namely, the .05, 50, and .95 fractiles. These fractiles
can be elicited from the decision maker (or his designated expert)
assessed, and what sort of interpolation should be used for the fractiles
309
are nine fractiles to be assessed for each attribute: the .05, .50,
do so are a bit more complex than those required to obtain the ui(ri)'s,
r.(al~.)
1 1
+ [4h  4h 2 ]r.(al(a.
1 1
+ b.)/2)
1
+ [h +2h 2 ]r 1.(alb 1. ) , (9)
ri(.05Ixi) for any xi such that di < xi .::. b i , and these results can be
The value of each odeuf ut(xi) can be obtained in this fashion for each
pected utilities are obtained from equation (8) at ai, (di + 6 i )/2,
then used to interpolate over these values of ¢i (xi) rather than over
the procedures can be compared again over each of these two segments,
new segment treated as if they were assessed data. Very few if any of
311
expression for u:(x.), since the conditions under which the two inter
1 1
example, one subdivision of the original range was necessary for two
5. Solution Characteristics
optima may exist even if each of the odeufs ut(x i ) is concave and if
(or policy directions) can be identified rather than just one. From a
an organization.
forms for the objective function in (7) than are actually appropriate
except in the case where there are an infinite number of local optima
that the optimum (if unique) lie at an extreme point (vertex) of the
feasible region. But in many cases the feasible region surrounds the
from the set of possible model solutions by its very structure, regard
over, the problem may still be easier to analyze and solve than if the
stitute for each other (K < 0) or complement each other (K > 0)  see
Edwards (4).
6. Industrial Applications
and the other within an R&D division. The two studies are described
data.
sibility for several major product lines involving the same general
basic areas:
ment director served as the decision maker and provided the necessary
during the planning year. The only constraint was that these fractions
sum to one. Upper and lower bounds were provided for each of the
decision variables.
Four attributes were defined for this problem  two in the cost
improvement area and one each in the quality and new features and
from what had been used in such years. The director regarded this
request, an analysis was done using revised data that more nearly
the activities of R&E were classified into the following six "missions":
(Il current product R&D, (2) manufacturing process R&D, (3) new
peopleoriented goals).
these missions. The "annual plan" for R&E budget allocation is used by
R&E should be allocated among the six missions. The primary purpose
disagreement between them. All assumptions were verified and all data
these fractions must equal one, together with the upper and lower
While they were not particularly surprised that a shift from the
vinced that the model developed could contribute to the R&E planning
tant input to the R&E planning process. They felt comfortable with its
viewed the model as the sort of decision aid for R&E planning they had
7. Concluding Remarks
The work reported here indicates both the desirability and the
While the technical level required for the analyst in using multi
the types of questions to which decision makers must respond are not
overly complex and in many cases are worth asking even if no formal
REFERENCES
[1] Baker, N. and Freeland, J., "Recent Advances in R&D Benefit
Measurement and Project Selection Methods," Management Science,
Vol. 21 (1975), pp. 11641175.
[2] Cochrane, J. L. and Zeleny, M., editors, Multiple Criteria Deci
sion Making, University of South Carolina Press, Columbia, South
Carolina, 1973.
[3] Cyert, R. M. and March, J. G., A Behavioral Theory of the Firm,
PrenticeHall, Englewood Cliffs, New Jersey, 1963.
[4] Edwards, W., "How to Use Multiattribute Utility Measurement for
Social Decisionmaking," IEEE Transactions on Systems, Man, and
Cybernetics, Vol. SMC7 (1977), pp. 326340.
[5] Giauque, W. C. and Peebles, T. C., "Application of Multidimen
sional Utility Theory in Determining Optimal TestTreatment
Strategies for Streptococcal Sore Throat and Rheumatic Fever,"
Operations Research, Vol. 24 (1976), pp. 933950.
[6] Gottfried, B. S., Bruggink, P. R., and Harwood, E. R., "Chemical
Process Optimization Using Penalty Functions," Industrial &
Engineering Chemistry Process Design & Development, Vol. 9
( 1970), pp. 581588.
[7] Gottfried, B. S. and Weisman, J., Introduction to Optimization
Theory, PrenticeHall, Englewood Cliffs, New Jersey, 1973.
[8] Hax, A. C. and Wiig, K. M., "The Use of Decision Analysis in
Capital Investment Problems," Sloan Management Review, Vol. 17
(Winter, 1976), pp. 1948.
[9] Himmelblau, D. M., Applied Nonl inear Programming, McGrawHill,
New York, 1972.
[10] Howard, R. A., "The Foundations of Decision Analysis," IEEE
Transactions on Systems Science and Cybernetics, Vol. SSC4
(1968), pp. 211219.
[11] Huber, G. P., "MultiAttribute Utility Models: A Review of Field
and FieldLike Studies," Management Science, Vol. 20 (1974),
pp. 13931402.
[12] Keefer, D. L., "A Decision Analysis Approach to Resource Alloca
tion Planning Problems with Multiple Objectives," Ph.D. Disser
tation, Department of Industrial and Operations Engineering, The
University of Michigan, 1976. Available from University Micro
films, Ann Arbor, Michigan.
[13] Keefer, D. L., "Allocation Planning for R&D with Uncertainty and
Multiple Competing Objectives," to be published in IEEE Trans
actions on Engineering Management.
[14] Keefer, D. L. and Gottfried, B. S., "Differential Constraint
Scaling in Penalty Function Optimization," AIlE Transactions,
Vol. II (1970), pp. 281289.
320
Ralph L. Keeney
WoodwardClyde Consultants
San Francisco, California
Gary L. Lilien
Massachusetts Institute of Technology
Cambridge, Massachusetts
ABSTRACT
(1)
i=O,l, ... N
E[u (x*)]
k 
=
(2)
(3) ml = f p\ (~)d~,
~d\.l
where Al is that set of \'5 such that (2) holds. Neglecting ties,
Ao' Al,···,A N are mutually exclusive and collectively exhaustive so
L mi = 1 as required.
Given the existing products in the market, for each possible x there
is a set A(~) (perhaps null) defined by
i
(4) A (~) : : {A: uk (y~) > uk (~ /~), i=O, 1, ... , N}
where the first term in brackets in (5) represents the market share of
product (~) and v(~) is the profit associated with the product. Under
"nice" conditions it may be possible to simply differentiate v(~) with
respect to ~ to determine the product position to maximize profit.
(8)
2
(10) uk(x/A) = AX  x k = 1, ..• , K.
where x is a price for the product and suppose the "true" distribution
of A among consumers is quantified by
There are three firms F l , F 2 , and F3 and the consumers are hetero
geneous in their perceptions of prices xl, x 2 , and x 3 as follows:
_(xi _ ¢i)2
1
(12) e 2 i 1, 2, ...
i i i
(13) E[Uk(X 11.)] = J uk (xiI.) Px(x/¢ )dx
x (x_¢i)2
2 1 2
J (Axx) e dx
x 2 'IT
i
where clearly ¢i is the mean value of x , or mean perceived price.
1 2 3
(14) ¢ = 2, ¢ = 3, and ¢ = 5.
Now we want to find the values of A for which xl, x 2 , and x 3 are
1 2
preferred. From (13), it follows that x is preferred to x on average
i f and only if
1 2
which holds i f A < ¢l + ¢2. Similarly x is preferred to x if and
2 3
only i f A < ¢l + ¢3 and x is preferred to x if and only if A < ¢2+ ¢3.
From this, since ¢l < ¢2 < ¢3, we have
1/
x I \1. < ¢l + ¢2 5
(16) m = J5 P A (A)dA J5 1 1
1 10 dA 2·
A=O 1.=0
3 2
In an analogous fashion, m = TO and m3 10·
2
1
(17) e
2"
preferred iff
¢4 + ¢l
so m4 = 10
~4 + ¢2 _
m4 10
¢3 _ ¢2
m4 = 10 ; and > ¢3, m4 = 0 since x4 would only be pre
ferred if A > ¢4 + ¢3 = 5 and A 10. Thus, it is clear
max
that under certain knowledge on the part of the firm F 4 , the optimal
¢4 subject to (17) is ¢4 + (: = ¢l = 2 for some small (: . Then m4 =
¢l + ¢4 4  (:
10 ro
3.3 Firm Decisions under Uncertainty
but due to the lack of available data, the firm's market research team
feels there is some uncertainty about the true 8, which is character
ized by
1
(20) p 8 (8) = 3" ' 9 < 8 < 12.
2
(2l) 1
"4 '
1 < ",1 < 3
'f'
~ = 3 ,
xlI
(22) :: ( preferred iff
..)
1
(23) Pa(a) 2" ' 4 2. a 2. 6.
m=2/3
9 10 11 12
e
Figure 1
a min 1 a max 2 1
so at worst, ml =
a = 3 and at best ml = a, = 3· Hence for 3
max m1.n
< ml < j , the probability ml < m equals t t + P(% < m). Integrating
332
1
""'"0 ml ~"3
(
\ 12  4
2' 1 < !.
\ 3m "3 < m  2
J
(24) Pm (m) =/ 21 4 < m < 1
l 4" 9 "2
\
I 3 27 !.2 < m < 2
2" 4" "3
I m
\.....0 2
m < "3
m=market share
Figure 2
333
REFERENCES
6. Hauser, John R. and Glen LT. Urban. "A Normative Methodology for
Modeling Consumer Response to Innovation," Operations
~esearch, Volume 25 (JulyAugust 1977), p. 579619.
12. Rao, Ambar G. and ~!elvin Shakun, "A Quasi Game Theory Approach to
Pricing," Management Science, Volume 18, No.5 (January 1972),
Part II, p. PIIO123.
15. Webster, Frederick E., Jr. and Yoram ~.Jind, Organizational Buying
Behavior (Englewood Cliffs, N.J.: Prenticehall, 1972).
SOCIAL DECISION ANALYSIS
USING MULTIATTRIBUTE UTILITY THEORY
by
Craig W. Kirkwood
WoodwardClyde Consultants
San Francisco, California 94111
ABSTRACT
Public sector decision makers are often concerned about the pref
erences of various groups that will be affected by their decisions.
This paper discusses the use of utility theory for analyzing such
situations. A conflict between Pareto optimality and certain equity
considerations is identified. Also, a number of practical difficulties
in applications work are discussed, and areas for further research are
indicated.
INTRODUCTION
Often decisions made by public sector decision makers have dif
ferent impacts on various groups within society. For example, some of
the controversy over proposed federal energy policy involves this
difficulty. Taxes on large automobiles might have greater impact on
large families than small; also, they may lead to decreased automobile
construction which would hurt the economies of parts of the country
where this industry is centered. Similarly, natural gas price deregu
lation might transfer income from gas consuming regions to those that
produce it.
Howard [5] has proposed the use of decision analysis in public
sector decision problems. He comments that this approach allows the
systematic, logical analysis of both uncertainties and preferences. In
this paper we examine the incorporation of the preferences of different
groups into a decision analysis for public sector decision making. We
show that there is no way to do this which is guaranteed to be both
efficient (in the sense that no other solution will make some group
better off without making another worse off) and equitable (i.e.,
considers the different impacts on various groups). In addition, a
number of practical difficulties that must be considered when incor
porating the preferences of different groups into a decision analysis
are discussed. Some areas for further research are indicated.
BACKGROUND
Decision analysis provides a mathematical approach to the analysis
of decision problems [4, 13]. The method can be summarized as follows:
336
where uk' k = I, 2, .•• ,N, is the utility function of the kth citizen in
the society and u is an unspecified function.
337
PARETO OPTIMALITY
A central concept in many studies of social decision making has
been Pareto optimality [3]. An alternative is Pareto optimal if there
does not exist another alternative that is at least as acceptable to
all society members and definitely preferred by some. The Pareto
Optimality Criterion specifies that in any social decision problem a
Pareto optimal alternative should be selected.
This criterion seems reasonable since if a Pareto optimal alterna
tive is not selected then there is another choice which will be more
preferred by at least one person and not less prefer.red by anyone.
There seems to be no reason not to select the alternative that makes
someone better off. However, imposing this condi'tion restricts the
form of the social utility function as the following theorem shows.
and N
(8)
Since these must be equal, equations (7) and (8) can be combined to
yield
u(O,o, ..• ,o,uk'o, ... ,O) = uku(o,o, ... ,0,1,0, ... ,0). (9)
Substituting from (9) into (6) yields (3) if Ak := u(O,O, ... ,O,l,O, ... ,
0). It is easy to show that the Ak'S must be greater than zero.
Hence, the theorem is proved.
EQUITY
Notice that the Criterion does not force the social decision
making process to have a preference between any two alternatives which
are equally preferred by each member of the society it only states
that a preference is possible. However, the following theorem shows
that even this weak condition is not compatible with the Pareto Opti
mality Criterion.
(10)
and
341
N
E [ul a 2 ] = LAkE [Uk la 2 ] (ll)
k=l
CONCLUDING REMARKS
REFERENCES
J. S. H. Kornbluth
Jerusalem School of Business Administration, The Hebrew University
ABSTRACT
1. INTRODUCTION
In recent years much attention has been given to problems of multicriteria
optimization, and in particular to the problems of finding efficient (undominated)
solutions to the multiobjective linear programming problem (MOLP). See for example:
Roy (1971), Philip (1972), Evans and Steuer (1973), and the comprehensive biblio
graphies in Cochrane and Zeleny (1973) and Zionts and Wallenius (1976a ). The general
aim of these approaches is to find the set of all the efficient solutions, which
will include the decision maker's "preferred solution". Zeleny (1971) extends the
analytical framework of MOLP by using the concepts of 'entropy' and the 'displaced
ideal' to help in the search for the preferred feasible solution.
The general assumption in multiple objective analysis is the existence of an
initially unspecified linear utility function, and one of the results of the analy
sis of the ultimate choice by the decision maker (DM) of ~ particular efficient
solution is that we can estimate the weights that are appropriate for his linear
utility function. In general these weights are not unique, but are in a space bound
ed by linear constraints. See Kornbluth (1974).
The problem of assessing the weights of a decision maker in an unconstrained
case has been given much attention in the psychometric literature. For example
Srinivasan and Shocker (1973a , 1973b ) give an LP based method for the calculation
of the ideal point and weights for a decision maker. The starting point for their
analysis is a set of paired comparisons (on a forced choice basis). Ideally for m
items one would like to have m(ml)/2 pairwise judgements although the method can
be applied where some judgements are missing. The LP is used to firxi the ideal
point and weights which minimize the violations of the rank orders of the initial
data.
346
In this paper we will develop an interactive method for ranking a given set
of items with multiple attributes or scores which does not require the DM to make
explicit assessments of marginal tradeoffs between scores. In so doing we will be
able to estimate the space of weights which correspond to the DM's attitudes as
revealed in the interactive analysis. We will also present some simulation results
which suggest that the DM need only consider a small proportion of the total number
of paired comparisons, thus the method offers a considerable saving in the amotmt
of input required from the DM. Finally we will suggest possible applications of
the method and areas for further research. The initial exposition is made without
proofs. Where necessary these are presented in the Appendix.
2. Ml!TI'HODOlDGY
We assume that there are m items (proj ects, stimuli, etc.) each with n charac
teristics (scores, criteria, attributes, etc.) given by the vectors x = { xki ; k =
l ... m, i = l ... n}. We assume that the decision maker DM has (as yet tmspecified)
weights A = {Ai' i = l ... n} such that item p is preferred to item q if
A. (x  x ) > 0
p q
We will use the sign ~ to designate preference, thus p r q implies that item p ap
pears before item q in the preference order.
where n(j) is the item in the j 'th position of the order n. The initial order n
could correspond to some simple ranking by one of the n criteria using a second
criterian to break any ties, and so on. Finally, we assume that for all orders,
any ties can be broken by slight perturbation. (See Appendix).
We note that the set of all the feasible orderings {n} induce a partition of
A, i.e.:
Assune that the items k,R. are adjacent in the current order Q, and that the
constraint:
A. (x.  x ) > 0
.K R.
the boundary determined by (3). If Q is a feasible order then Q' will also be fea
sible (see Appendix). The method suggested for analysing the J1.1's preferences and
for determining Q* is as follows:
iii. present the DM with the list of pairs in Q which determine the boundary of
In (and their associated characteristics)
It should also be noted that the method lJl9.intains feasibility throughout the
analysis. Starting from an initially feasible order we IIDve via feasible orders
until the desired endpoint is reached, thus we avoid any paired Judgements which
might cause violations in the order.
348
(4.1)
n.l =1 (4.2)
>0
A.l  (4.3)
The boundary of IU is deternlined by those rows of (4.1) which are tight (active)
constraints for some value of A. For such rows the value of min An(i)' A subject to
(4.1)  (4.3) is zero. Since we expect that m will in general be greater than n,
it is more convenient to consider the dual problem:
max p
]l.A n + !.P ~ c
]l ~ 0, p unconstrained (5)
where! is a column with unit entries and c is a row of A(l' sa:y An(i)'
By LP duality, if (5) has a feasible solution for which p* = 0, then the row
An(i) represents a binding constraint for IU and the associated pair (n(i), 01(1+1»
represent a binding pair. Furthermore, a strictly positive value for any variable
l1c at an optimum of (5) implies that the row An(k)' A .:: 0 is a binding constraint
for IJ.. This fact can be used to reduce the number of dual problems that need to
be solved in order to determine the set of binding pairs of elements in n. Once a
column k has been identified as being basic at an optimal solution we need not solve
(5) using c = An(k)' Assuming that m » n, the dual problems will have many more
columns than rows and its solution will, in general, be relatively simple. (For
alternative approaches to the problem of identifying efficient vectors see Zionts
and Wallenius (1976b ).)
349
EXAMPLE
A
a
( 2
1
1
3
4
8 6
2
2
\
I
I
I 1 2 0 I
I
II
\
1
0
5
3
5
2 )
In order to identify the space Aa we solve the series of problems:
max p
For c = (1,8,6) the solution is p* > O. ].14 is again basic, etc .... The bin
triangle A= I
{>. D. i =l,"1 ::. a}. Each constraint is marked with the corresponding
binding pair, each element of the pair is marked on the side of the constraint on
350
which it is preferred to the other. Thus for the constraint (6,7) item 6 is pre
ferred to item 7 in any area to the left of the constraint; item 7 is preferred to
item 6 in any area to the right. 'The area \ is bounded by the four constraints
(2,3), (4,5), (5,6), (6,7) and is marked 'a' on the diagram.
Figure 1; A Spaces for some feasible orders ( only tight constraints included )
Let us suppose that the DM is unsatisfied with the relative positions of item
2 and 3, and suggests that item 3 should be ranked above item 2. 'The change of or
der from Qa = (1,2,3,4,5,6,7) to Qe = (1,3,2,4,5,6,7) implies a move across the
constraint (2,3) to the space A. For the order Q , the binding preferences are
e e
(3,2), (4,5), (5,6).
351
One of the major problems in any analysis of preference or utility is the num
ber of comparisons that must be made by the DM in order to be able to calculate ap
propriate weights. For methods based on paired comparisons of m items, m(ml)/2
comparisons are ideally required. In sorting methods using simple linear algorithms
such as the standard exchange method ("Bubble Sort") the user can expect a maximum
m2/2 comparisons (exchanges) and an average of m2/4. (For details of computer sor
ting methods see Knuth (1973) or Lorin (1975).) In the method presented above we
assume that there is an initial feasible ordering of all the items. At each stage
the DM is presented with the binding pairs  whose present paired order determines
the complete order. A switch of one such pair creates another feasible order, and
the DM is presented with the next set of binding pairs. However, it remains to be
seen whether the effect of increasing m and n increases the number of paired judge
ments beyond those that the ]]V[ can be reasonable expected to make.
The simulations were carried out for m = (3,4,5,6,8,10,12,14,16,20) and for
n = (3,4,5,6). In each case the basic data was generated using random numbers be
tween 0 and 1. The matrix A was formed by appropriate subtractions. In Fig. 2 and
Table 1 we present the estimate of the number of feasible orders for m=5,6,7,8,9
and the proportion of feasible orders to the total possible number of orders (m!),
for the case where n = 3.
5 19.2 0.16
6 40.0 0.043
7 43.3 0.0086
8 90.7 0.0023
9 259.5 0.00072
N number proportion P
estimate of
no of feasible
200 .2
orders: N
proportion of
orders which
are feasible: P
150
100 .1
10 m
Since the proportion of feasible orders is very small, the analysis of Jb was
carried out as follows:
1) Starting from a feasible (lexicogt:>aphic) order (/1' the tight constraints
of '\ were evaluated.
2) A random choice was used to move to an adj acent space. ~ was analyzed
and a further random choice was made.
At each stage we noted the number of binding constraints for each order and
the number of LP's that needed to be solved in order to identify the space. (The
number of binding pairs corresponds with the numbers of hyperplanes which bound the
space tn.)
The results are presented in Figs. 3 and 4 and Tables 2 and 3. As can be
seen from Fig. 3, the average number of binding constraints for tn tails off below
the value n + 1 as m approaches 16 to 20. Even for n = 6 and m = 20 we would ex
pect the J]VJ to have to peruse only 7 pairs of items and to switch one pair at each
iteration. This feature is very advantageous since such data can easily be pre
sented on the screen of a computer terminal.
~ 3 4 5 6
n=6
6
o
o
n=5
n~4
'"~
n3
6 10 12 14 16 18 20 m
~n 3 4 5 6
. m~
For m ~ 6 the number of LP's that must be solved at each stage seems to vary
linearly with m, the number required for n = 3 being 1 or 2 greater than that re
quired for n = 6. The increased size of these LPs for increasing m and n does leng
then the time needed for each iteration but this is still very small.
The operational inference that can be drawn from these results is that if a
DM wishes to rank a large number of items, it should be sufficient to select 2030
representative items for the interactive analysis in order to identify the approxi
ma.te A space. Once this is identified, the remaining items can be ranked accordingly.
356
Simplex
16
n4
14 n5
n6
12
10
8 10 12 14 16 18 20 m
APPLICATIONS
'Ihe method for interactive ranking presented in this paper can be used in any
situation where either the rank order or the associated utility weights (or both)
pre of interest. In the ordering of R&D proj ects, Investment Opportunities, Per
sonnel, etc. the ]]V[may be interested in both the order and the weights associated
with his policy making decision*. The weights might be needed in order to construct
a bonus system based on work performance which will be compatible with a particular
multicriterion ranking; they might be needed to construct an incentive index for
Governmentsponsored R&D projects based on the contribution to national objectives
and on agreed multicriterion ranking of selected projects, etc. etc.
The method can also be used as an aid in the analysis of decision making, fin
ding appropriate weights (or weight intervals) for further multicriterion optimi
sation (see e.g. Steuer (1975)) etc. The method provides an alternative approach
to Delphi and other interrogative methods for evaluating the preferences of a deci
sion maker or decision making group.
SUMV!ARY
In this paper we have presented an interactive method for the ranking of items
with multiple attributes, and estimating the weights for the associated linear uti
lity function. Simulation results suggest that in cases where the number of attri
butes is 6 or less, a maximum of 2030 items need be considered in order to obtain
a reasonable estimate of the appropriate weight space.
* Where the ultimate aim is the allocation of scarce resources, ranking alone
will not provide the optimal allocation. other methods of allocation (such as li
near or mixedinteger programning) will have to be used. 'Ihe ranking stage can be
used to great advantage in limiting the range of allowable weights for any second
stage allocation.
358
REFERENCES
J.P. Evans and R.E. steuer, "A Revised Simplex Algorithm for Linear Multiple Objec
tive Programs", Mathematical Progr'?llJll:ing, Vol. 5, No.1, pp. 5472,
(1973) .
D.E. Knuth, 'Ihe Art of Conputer Pro~ Vol. 3, Sorting and Searching, Addison
Wesley Publishing Co., (1973).
H. Lorin, Sorting and Sort Systems, Addison Wesley Publishing Co., (1975).
B. Roy, "Problems and Methods with Multiple Objective Functions", Mathematical Pro
gramming, Vol. 1, pp. 239266, (1971).
V. Srinivasan and A.D. Shocker, "Linear Programm1ng Techniques for Multid:imensional
Analysis of Preference", Psychometrika, Vol. 38, No.3, pp. 337369,
(September 1973).
V. Srinivasan and A.D. Shocker, "EstinRting the Weights for Multiple Attributes in
a Conposite Criterion Using Pairwise Judgements", Psychometrika, Vol.
38, No.4, pp. 473493, (December 1973).
R.E. Steuer, "Interval Criterion Weights Programming", University of Kentucky (1974).
M. Zeleny, "A Concept of Conpromise Solutions and the Method of the Displaced Ideal",
Conputers and Operations Research Vol. 1, pp. 479496, (1974).
S. Zionts and J. Wallenius, "An Interactive Programning Method for Solving the
Multiple Criteria Problem", Management Science, Vol. 22, No.6, pp.
652663, (February 1976).
S. Zionts and J. Wallenius,' "Identifying Efficient Vectors: Some 'Iheory and Com
putational Results", Worldng Paper, No. 257, School of Management,
State University of New York at fuffalo, (November 1976).
359
APPENDIX
Uniqueness:
'lhe relationship between n and 'n is not necessarily unique. If any of the
such ties do occur, we will assume that it is possible to perturb the weights slight
ly so as to el:imina.te the tied position. We will also asaune that Ai > 0 for all
i, or that for a case where Ai = 0, the same order is preserved as if \ has the
value E (arbitrarily small, but positive). 'lhis is implicitly assumed in the proofs
that follow.
1) An(j) = xn(j)  xn(j+l) are rows of the matrix An for an order n, and
j=I. •• mI.
2) for any j, k (not necessarily adjacent).
3) 0 will be defined as a domination orner if for all elements j, k E 0
j > k + Xj  ~ ~ o.
(0 is a domination order implies that all the elements of An are greater than
or equal to zero and that ( 4.1)  (4. 3) are satisfied for all A ~ 0.)
4) n will be an infeasible order if any row of An has only strictly negative
elements. In this case there is no A satisfying (4.1)  (4.3).
Lemma 1: n is a feasible order if
1) either n is a domination order, or
2) 3 at least one adjacent pair (j,k) s.t. the constraint Ajk • A ~ 0 is an
active constraint in (4.1)  (4.3).
Proof: If 0 is a feasible and is not a domination order, (4.1)  (4.3) are not
satisfied by all A, A ~ 0, EAi = 1. Furthermore, there exists at least one
row of An with both positive and negative elements. One such row IIRlst be
an active constraint.
360
A £ 1\0 (A.l)
Aij.A> 0 (i,j) = (k,m), (t,n)
has an optimal solution A*, s.t. z ~m = Atm.A* = O.
Clearly A* is also feasible and optimal for
max Atm.A and min Atm.A
s.t. Atm.A = °
Aij.A :.. ° (i,j)
~(k,t), (m,n), (k,m), (t,n)
EA. = 1
l
L(n(p), n(p+l)), p =l ... ml, n(p) t t
A. > 0 (A.2)
l
Replacing max Atm.A with min  Atm.A; Atm.A = 0 with  Atm.A :.. 0; and noting
that Amt = xm  xt = A~,m' we see that A* is feasible and optimal for
min Amt·A
~.A >0
_{(k,t), (m,n), (k,m), (t,n)
Aij .A > 0 (i,j)
L (n( p), n(ptl) p=l ... ml, n(p)t t
(A.3)
If n' = , k, m, t, n, ,) the constraints of (A.3) are
simply ~, = {AIAn,.A :.. 0, EAi = I, Ai:" O} with the addition of the (now)
redundant constraints (k, t) and (m,n).
To complete the proof we note that:
i) A* feasible for (A.3) + n' is a feasible order.
ii) Amt.A* = 0 +(m,t) corresponds to an active constraint.
361
iii) the constraint (t,m) or (m,t) is the cOllIlX)n boundary of 'h and 'hI'
Theorem: The set of feasible orders is a connected set whose adjacent elements
differ by the relative position of just two items,
Proof: Let A = {A I 1:Ai = 1, Ai ~ O}
1) If the only feasible order is the domination order (or equivalent ties)
the set contains just one element,
2) If not there exists a feasible order Ill' By Lemna. 1 there exists at least
induction it can be shown that either the sets {'h} identified thus far
form the desired partition of A, or there exist a pair (j ,k) of some fea
sible order which can be switched to give a new feasible order, The pro
cess continues until the set A is co:v:ered cO!!illetely,
INTERACTIVE INTEGER GOAL PROGRAMMING: METHODS AND APPLICATION
Sang M. Lee
The University of NebraskaLincoln
ABSTRACT
Goal programming has received a great deal of attention during
the past several years as a management decision making tool for prob
lems that involve mUltiple conflicting objectives. One area of goal
programming which requires further development is the integer solution
methodology. The purpose of this paper is the development and demon
stration of interactive integer goal programming methods for mUltiple
objective problems through a realworld application example. The
interactive approach allows not only a simple way to derive an integer
solution to the problem but it also provides a complete sensitivity
analysis of the model.
1. INTRODUCTION
In today's complex organizational environment, the decision maker
is regarded as one who attempts to achieve a set of objectives to the
fullest possible extent in an environment of conflicting interests,
incomplete information, and limited resources [31]. The soundness of
decision making is measured by the degree of organizational objectives
achieved by the decision. Therefore, recognition of organizational
objectives provides the foundation for decision making. Decisions are
also constrained by environmental factors such as government regula
tions, welfare of the public, and longrun effects of the decision on
environmental conditions (i.e., pollution, quality of life, use of non
renewable resources, etc.). In order to determine the best course of
action, therefore, a comprehensive analysis of mUltiple and often con
flicting organizational objectives and environmental factors must be
undertaken. Indeed, the most difficult problem in decision analysis
is the treatment of multiple conflicting objectives [30].
363
n *
X.  l: a .. X. (i=l,m)
l j=l lJ J
where, a *
ij coefficients of the ith row and jth column in the final
simplex tableau
b*
i rhs value of Xi in the final simplex tableau.
If we denote the nonnegative fractional part of b*i by f(b "'I(i ) and the
nonnegative fractional part of a~j by f(a~j)' the equation can be
rearranged as
nL * J. = f(b.)
f(aiJ.)X * + (integer), (i=l,m)
j=l l
Then, since all the variables must take nonnegative integers, we can
formulate the cutting plane constraint as
Step 4: For each subset, the optimal value of the objective function
(degree of goal attainment, Uk) is determined as the lower
bound. The optimal Uk of a feasible solution which satisfies
integer requirements becomes the upper bound. Those subsets
having lower bounds that exceed the current upper bound must
be excluded from further analysis. A feasible solution
having Uk which is as good as or better than the lower bound
for any subset is to be found. If there exists such a solu
tion it is optimal  stop. If such a solution does not
exist, a subset with the best lower bound is selected and go
to step 3.
As in the cutting plane method, the added constraint will be sat
isfied by assigning the super priority factor Po to the minimization
of the appropriate deviational variable.
Implicit Enumeration Method
The implicit enumeration method is developed to solve the goal
programming problem which requires either zero or one values for the
decision variables. The method is basically a combination of Balas'
[1], [2] additive algorithm and Glover's [12] backtracking procedure.
The solution combinations are evaluated by introducing one decision
variable at a time. vfuen no further variable can be added to improve
the solution beyond the current optimal solution, then a backtracking
technique is instituted to evaluate other combinations in a systematic
fashion. The optimal zeroone solution is the upper bound solution
when all possible combinations are evaluated.
The basic solution procedures can be summarized as follows:
Step 1: Set all variables as free variables (they are implicitly
equal to zero and not in the solution).
Step 2: Evaluate all free variables and select the one which will
improve the solution to the greatest extent when a value of 1
is assigned to this variable. Enter it into the solution.
368
FIGURE 1
372
Headquarters Troop
(with major road segments)
FIGURE 2
373
This model will explore both the optimal placement of these 22 men,
as well as recommendations for the implementation of a Selective
Traffic Enforcement program consisting of a maximum of three troopers
which can be utilized in addition to the existing Troop officers.
Model Variables
the number of patrolmen assigned to road segment "i"
during shift "j" where j = 1,2, ... ,7; i = 1,2, ... ,6.
Specific variable assignments related to the six road segments within
the given region of Headquarters Troop are as follows:
u.S. 77 from Lincoln to Wahoo (27 miles)
u.S. 77 from Lincoln to Beatrice and Nebraska 33 to
Crete (52 miles)
03:0006:00 Nl = 1
06:0007:00 N2 = 3
07:0013:00 N3 ? 7
13:0016:00 N4 = N3  1
16:0017:00 Ns = (N 3 + N6)  (N 2 + N7 )
17:0002:00 N6 ? 6
02:0003:00 N7 = 3
The patrolmen are assigned to report for duty at 3:00 AM, 6:00AM,
7:00 ~~, 4:00 PM, or S:OO PM. Once he reports in, however, the
trooper stays continually for a 10hour shift. Cons taints to meet
these shift requirements and ensure assignment of 10 hours shifts are
as follows:
6
l:
i=l
X' l
l.
+ d 3 1
6 6
l:
i=l
X' 4
l.

i=l
1: X' 3 + d
l.
6 d+
6 1
6 6 6
l: X.S  1: X' 3  1: X' 6 + dj d+
7 6
i=l l. i=l l. i=l l.
6
1:
i=l
X' 6 + d
l.
S d+
S = 6
6
1: X' 7 + d g  d+
9
= 3
i=l l.
376
Xu ? 1 (i 1, ... ,6)