Preference Issues in Group Decision Making

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Preference Issues in Group Decision Making

• David L. Olson
• Texas AM University
• INFORMS San Antonio

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Ideal

• Objective measures
• Max Weber Rational organization
• labor grouped in factories
• populations massed in cities
• technical control advertising
• planned sociological research
• Nozick Webers rationality reshaped the world
• Gadamer Weber sought to eliminate every aspect
  of a worldview and all value judgments from
  science
• Toulmin rational, objective, quantitative
  preference

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Objective Measures

• Objective preferred
• can measure
• past profit, after tax
• accurate preference input
• Rational decision maker
• Accounting Jensen - Agency Theory
• Economics Williamson - Transaction Cost Analysis
• Subjective
• know conceptually, but cant accurately measure
• response to advertising

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MAU Group Value

• Group members m1 to N
• Criteria i1 to k
• Alternatives j1 to J

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Dependence

• multiplicative group utility function
• under preferential dependence
• (Keeney Raiffa, 1976, p. 531)

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Keeney Raiffa 1976

• Group aggregation methods
• Supra decision maker
• verifies assumptions
• determines utility/value functions
• assesses scaling constants
• makes interpersonal comparisons of utility
• such questions are not easy

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Keeney Raiffa 1976

• Participatory Group Decision
• consensus would be needed
• Agreement on scaling constants would likely be
  difficult to achieve
• Group might select the alternative they all agree
  is best
• If not, they may agree on alternatives that
  should be eliminated
• At least provides basis for seeking constructive
  compromise

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MAU ApproachesBose, Davey Olson, Omega, 1997

• Determine group utility function
• 1a. Edwards model the final decision maker
• 2. Voting
• Or sum of ranks, or equivalent
• Reach consensus informally
• 3a. Give decision maker justification

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1. Group Utility Function

• Dyer Miles, Operations Research 1976
• Space flight trajectory evaluation
• Individual lottery comparison, aggregated
  multiple ways
• Golabi, et al., Management Science 1981
• DOE solar energy projects
• Individual preference elicitation, mean ratings
  by attribute to aggregate
• Dyer Lund, Interfaces 1982
• Petroleum product strategy selection
• Individual elicitation through questionnaire,
  expert assignment of weights
• Thomas, et al., The Journal of Applied Behavioral
  Science 1989
• Computer system installation
• NGT, individual scoring upper management scored
  for group
• Reagan-Cirincione, et al., Interfaces 1991
• Insurance options
• Task force scoring, weights assigned to each
  stakeholder

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2. Voting (or sum of ranks)

• Lincoln Rubin, IEEE Transactions SCM 1979
• Coal-fired plant strategy
• Interview individuals aggregate by method of
  marks, majority rule
• Method of marks best scenario 5, worst 1, rest
  by judgment
• Edwards von Winterfeldt, Risk Analysis 1987
• German energy, Arizona water control
• Interview, obtained individual weights rank sums
  to aggregate

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3. Consensus Seeking

• Ulvila Snider, Operations Research 1980
• Oil tanker safety negotiation
• Interviews/questionnaires, used to sort
  alternatives for discussion
• Keeney, et al., Operations Research 1986
• Electrical generation
• Interviews with pairwise tradeoffs one
  respondents results used because all were
  similar
• Jones, et al., JORS 1990
• UK energy policy
• Utilities assessed by individuals basis for
  discussion negotiation

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ACCURATE PREFERENCE INPUT

• incomplete information
• uncertain measures
• uncertain preferences
• group participation
• risk
• time pressure Edwards - how can you calculate
  expected utility in available time?
• change competition complexity

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Objective/Subjective

• OBJECTIVE what is convenient to model
• ideal - eliminate bias, arbitrary judgment
• extreme cost/benefit analysis spanning years of
  measuring the unmeasurable
• SUBJECTIVE what people do to cope
• value is subjective after all anyway
• value is what MAUT, MCDA seeks to measure

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Public Rationality

• Bentham (Arrow, 1951) If we admit interpersonal
  comparisons of utility, we can order choices by
  function of utilities
• Hume (Nozick 1993) Group of individual
  preferences could be irrational
• Nozick 1993 If a public decision, may need to
  bend to assure others
• Rosenau 1992 Discussion in the public sphere
  depends on force
• The stronger argument always carries the day

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Group Rationality

• Buchanan Tullock 1965 only individuals can
  be rational, not groups
• Individuals within groups likely to have
  different aims
• Individuals within groups unlikely to take into
  account full marginal costs
• Arrow 1974 There cannot be a completely
  consistent meaning to collective rationality
• YET Since individual activities interact, joint
  decision will be superior to separate decisions

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EMPIRICAL EVIDENCE

• contrary to rational choice models
• Braybrooke Lindblom 1969 Simon 1985 Payne,
  et al. 1993
• Some problems never reach decision maker
• decision makers often have simple maps of real
  problems
• all alternatives not known, so decision makers do
  not have full, relevant information
• individual altruism
• Tversky 1969
• systematic predictable economic
  intransitivities
• Kahneman, Slovic Tversky 1982
• people use heuristics rather than follow rational
  model

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Organizational Aspects

• Cyert March 1959
• Decision making in organizations
• Multiple actors
• Inconsistent preferences

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J. G. March 1978

• Rational choice involves 2 guesses
• future consequences of current actions
• future preferences
• Individual preferences often appear fuzzy,
  inconsistent, to change over time
• Interpersonal comparisons by individual across
  time similar to aggregating across individuals
• We are left with the weak theorems of social
  welfare economics

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Choices

• Arrow
• Voting
• Market mechanism
• Administrative discretion
• Rule of law preference endogenous
• Dictatorship
• Convention preference endogenous
• Levitan March 1957
• Elected representatives making bargains

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Amatra Sen 1982

• Aggregation rules
• Utilitarian maximize weighted sum
• Rawlsian maximize minimum
• Knight greater tendency toward inequality under
  voting than under the market

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Arrows Impossibility

• Voting leads to possibility of intransitivity
  (Nanson)
• If exclude the possibility of interpersonal
  comparison of utility, only imposed or
  dictatorial orderings would be satisfactory
• Black under single-peaked preferences, majority
  decision leads to transitive result for odd
  number of voters
• Median of first choice

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Arrows Social Welfare Function Conditions

• Positive association of social and individual
  values
• Respond positively to changes in individual
  preference
• Independence of irrelevant alternatives
• Condition of citizen sovereignty
• Free to select one alternative over another
• Condition of nondictatorship
• choice not based solely on the preferences of one
  individual
• Summation of utilities
• Based on ordinal, not cardinal, values

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Arrow Conclusions

• Interpersonal comparison of utilities has no
  meaning so Arrow assumes only ordinal
• Doctrine of voter sovereignty is incompatible
  with collective rationality
• Individuals have incentive to misrepresent their
  orderings in a group setting
• The market cannot be taken as a social welfare
  function since it cannot take into account
  altruism

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Buchanan Tullock

• Arrow requires all votes be pairwise, which leads
  to cyclical majority
• Whole proof makes no sense if applied to voting
  methods other than pairwise
• If allow logrolling, problem of cyclical majority
  vanishes
• But logrolling is politics
• Time sequence very important
• Arrows wording rules out all possible voting
  rules except unanimity if there is logrolling

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Unanimity

• Arrow not majority, but unanimity required
• Buchanan Tullock The majority rule has been
  elevated to the status which unanimity should
  occupy
• Buchanan Tullock the rule of unanimity is the
  only rule indicated by widely acceptable welfare
  criteria
• only this rule will produce Pareto-optimal
  solutions
• Inherent interdependence of individual choices
  makes strategic behavior inevitable in politics

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Consensus is not truth

• Habermas 1991 The criteria of rationality
  completely lacking in a consensus created by
  sophisticated opinion-molding services under the
  aegis of sham public interest
• Feyerabend 1993 Eisenstein in Potemkin knew
  that history needed to be improved in order to be
  exciting and meaningful

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Rely on Experts?

• Durkheim 1898 Political opinions should rest
  on expert opinion
• Dewey Putnam 1992 NO! Experts inevitably
  removed from common interests

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PROCESS

• Dewey 1888 it is not the majority vote, but
  the process that forms the majority that matters
• Arrow 1951 Belief in democracy may be so
  strong that decisions arrived at democratically
  may be preferred to decisions reached other ways
  that are better for each individual
• Buchanan Tullock 1965 Group decisions result
  from individual decisions combined through
  specific rules

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Final Thoughts

• Group preference function probably doesnt exist
• Arrow dont settle for less than unanimity
• Unrealistic have to proceed
• Americans tend to use weighted sum
• Choice minsum or maximin
• Other approaches can be applied
• Focus on process, hope for agreement