Lecture 19/20 - AM - Part 2

Question 1

What are decision mainly made of?

Answer 1

Emotional, instinctual reasons. (90-95%)

Question 2

What does MCA stand for?

Answer 2

Multi Criteria Analysis

Question 3

What are the steps for MCA?

Answer 3

1) Select decision criteria or indicators
2) Weightings for ea indicator (0-5)
3) Indicator value for ea option
4) Calculate the overall results (multiply weighing with value and sum)

Question 4

Disadvantages of MCA

Answer 4

• weighting hard to decide

- inconsistencies in weighting

Question 5

Advantages of MCA

Answer 5

• fast and dirty

- combine w/ others = powerful

Question 6

What is risk based decision making?

Answer 6

Risk = prob x consequence

identify high risk areas that should be addressed

Question 7

What is risk used for?

Answer 7

Balance the funding gap.

Powerful when combined w/ Monte Carlo

Question 8

What is analytical hierarchy?

Answer 8

Pairwise comparison method.

Question 9

Advantages of analytical hierarchy?

Answer 9

• Based on mathematical decision theory and is industry standard.
• Generates ratio data

Question 10

Disadvantages of analytical hierarchy?

Answer 10

• Labour intensive

- Participants perceive the tool as a black box if they do not understand the mathematical theory

Question 11

Steps to analytical hierarchy process? (AHP)

Answer 11

1) Define objective and decision options.
2) Structure elements in criteria, sub-criteria, alternatives.
3) Pairwise comparisons of elements in ea group.
4) Calc weighting and consistency ratio.
5) Evaluate alternatives according to weighting.
6) Evaluate benefit cost analysis (BCA).
7) Make decision

Question 12

Pairwise comparison scale?

Answer 12

from 1/9 to 9. if comparing two one would get say 1/3 and the other gets 3. 1 would mean that they are equal.

Question 13

What’s in the criteria comparison matrix?

Answer 13

This is step 3. it is a matrix with all the comparison scores. columns mirror the rows.

Question 14

What is the normalized matrix?

Answer 14

A normalized version of the comparison matrix. All column will add to 1.

Question 15

What is {W}?

Answer 15

The normalized principal Eigenvector of C matrix.

Question 16

Why do a consistency check?

Answer 16

Make sure it makes sense. If A > B and B > C C cannot be greater than A.

Question 17

How do we check for consistency?

Answer 17

• Mat multiplication. {Ws} = [C]{W}.
• {consis} = {Ws}.*{1/W}.
  Find lambda = average({consis}).
  Find CI = (lambda-n)/(n-1)
• Look up RI
• Find consist ratio CR = CI/RI
• If CR = 0.1 = revaluate [C]

Question 18

How are subcriteria weightings determined?

Answer 18

They are proportional to the main criteria. sub criteria = criteria * sub criteria

Question 19

Benefit cost the ahp scheme?

Answer 19

idk

Question 20

What are the limitations of AHP?

Answer 20

• We are naturally consistent so matrix not perfect, may want to do multiple times
• Get lazy with larger matrix comparisons
• Only an approximation of {W} and lambda.

Question 21

What is the Delphi method?

Answer 21

• Less labour intensive replacement for the AHP method.
• Minimiser variance
• Based on, group judgements more valid than individual, structured group more accurate than unstructured.
• Requires experts.

Question 22

How does Delphi method work?

Answer 22

• Rounds
• Questionnaires.
• Revise

Question 23

Sunk cost

Answer 23

focus on future cost/benefits

Question 24

Self serving bias

Answer 24

If we win it is out success, if we lose, it is someone else fault.

Question 25

Sudo-diagnostic information?

Answer 25

• Information that you see that isn’t really relevant but you think it is.
• You see there is a correlation and imply there is causation.

Question 26

Subtlety diagnostic information?

Answer 26

• information that is important but you don’t think it is.

Question 27

Conformation Bias?

Answer 27

Once you have decided on something, new information has less of an impact.

Question 28

Inside view?

Answer 28

Always optimistic

Question 29

Outside view?

Answer 29

less optimistic but more realistic.

Question 30

Think up down?

Answer 30

Aims - conclusions

Actions -Causes

Question 31

Think bottom up?

Answer 31

Conclusions - Aims methods etc.

Causes - Auctions