Basic Aspects of the Multiple Criteria Decision Making Paradigm

Abstract

In this chapter we present the basic elements of the second analytical tool that we use in our research: multiple criteria decision making (MCDM). It stresses the aspects most related to the design of public policies. MCDM has been designed to overcome two of the key limitations of the traditional approach: (1) the difficulty of characterizing preferences by a single criterion and (2) the fact that rigid constraints are not always a realistic representation of feasibility for decision makers. We start by introducing some basic concepts underlying the MCDM methodology, as well as a general distance function that provides a unifying framework for all the MCDM techniques that will be used in the book. The chapter focuses on continuous MCDM techniques, starting with the generation of efficient solutions by multiobjective programming. Then we introduce compromise programming, which aims at providing solutions with a minimal distance from the ideal point. The third approach is goal programming, which is based on a Simonian satisficing logic rather than on a conventional optimization logic. We also discuss the advantages and disadvantages of different MCDM approaches within a policy making context and give a brief historical overview of MCDM.