Weighting of decision criteria

Many of you are familiar with multi-criteria (multi-attribute) scoring methods for evaluating the alternatives in a decision.  Before you can score alternatives (estimate their relative effectiveness against each factor), you should first set the relative priority of the criteria/factors.  Remember that these criteria are the way that the decision stakeholders express what they value; they certainly will value some factors more than others.  These values are typically called “weights” or “weighting factors”.  Weights express the relative importance of one factor compared to others, averaged across the inputs and experience of all the decision stakeholders.

I’ve mentioned before that I think of criteria as arrows (vectors) that point in the direction of “goodness”.  Before you attempt to assign relative weights to these criteria, you should first set 2 values along each arrow:

  • Threshold or Must limit: stakeholder walkaway point, the value at which you will reject an alternative from further consideration
  • Objective or Ideal value: realistic, but stretch goal that you think any alternative might deliver

Setting these values before you attempt to prioritize the factors can help you avoid a common weighting trap.  It’s very common for folks to think of a factor with a very stringent, demanding threshold as one that is extremely important, even critical.  They will say, “it’s critical that I get a car that gets at least 40 miles per gallon”.  However, if you set your threshold that high, then it will usually imply that you should give the “Fuel economy” factor a fairly low weight relative to other factors.  That’s because you’re actually weighting the relative value of “margin” beyond your threshold; answering the question, “Assuming that any vehicle I buy gets at least 40 mpg, how valuable is fuel economy beyond that level relative to comfort margin, carrying capacity margin, acceleration margin, resale value margin, purchase cost margin, etc. ?”

I call this approach to weighting “relative margin valuation“; I’m sure it has a fancier name elsewhere in decision analysis literature, but I’m already approaching my threshold for writing today’s blog entry…

Use the Decision Driven® Solutions Framework (DDSF) to define and weight your decision criteria. Get started today by contacting the Decision Driven® Solutions team at trial@decisiondriven.com or solutions@decisiondriven.com to start your free trial of DDSF.

About decisiondriven

Innovator in Decision Management, Systems Thinking and System Engineering methods and tools
This entry was posted in Decision Concepts and tagged , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s