Decision Analysis for Management Judgment, 6th Edition

2How people make decisions involving multiple objectives

Introduction

Many decisions involve several objectives. For example, when choosing a holiday destination, you may want the resort with the liveliest nightlife, the least-crowded beaches, the lowest costs, the most sunshine and the most modern hotels. If you are a manager purchasing goods from a supplier, you may be seeking the supplier who has the best after-sales service, the fastest delivery time, the lowest prices and the best reputation for reliability. This chapter looks at how decision-makers make intuitive choices involving multiple objectives. Such decisions are usually ‘unaided’ in that they are made without the support and structure provided by the decision-analysis methods we will introduce in subsequent chapters.

Suppose we asked you to multiply 8 by 7 by 6 by 5 by 4 by 3 by 2 by 1 in your head. You could probably guess the correct answer, but you may or may not be surprised that the ‘correct’ calculator-derived answer is 40 320. Which do you believe produced the most valid answer? Your intuition? Or the calculator? Most of us would tend to trust the calculator, although we might run through the keystrokes a second or third time to check that we had not wrongly entered or omitted a number. The conclusion from this ‘thought experiment’ is that the human mind has a ‘limited capacity’ for complex calculations and that technological devices, such as calculators, complement our consciously admitted cognitive ...