A New Framework for Multiple-Criteria Decision Making: The Baseline Approach

Abstract

AbstractThis chapter proposes a new multi-criteria decision-making (MCDM) problem formulation. We generalize the standard MCDM problem by assigning a specific role to one alternative from the pool of alternatives—to the one the decision maker is currently in possession of. We call this current solution a baseline. We propose that the baseline can be treated differently from the other alternatives and in fact can represent the reference solution for the whole decision-making problem. It can even serve as a basis for the determination or modification of criteria weights. The introduction of the baseline in MCDM problems allows for more customizability in the modeling of real-life decision-making. Two rules for criteria weight formation based on the baseline are introduced and discussed: Appreciating Possessed—weights of criteria are proportional to the satisfaction of the criteria by the baseline; Craving Unavailable—higher weights are assigned to those criteria that are less satisfied by the baseline while lower weights are assigned to criteria that the baseline satisfies better. Combining these two rules gives birth to several common behavioral effects, such as reluctance to switch to an alternative identical with the baseline; unwillingness to switch to a better alternative if satisfied with the baseline; endless switching between two alternatives in case of poor satisfaction; and seemingly exaggerated impact of a new feature introduction. The overall satisfaction with the baseline is quantified, however the specific role of the baseline alternative gives the name to the proposed approach. Overall, we provide a formal model for many real-life decision-making problems that are difficult to model under the standard MCDM problem formulation.KeywordsDecision supportMultiple-criteria decision-makingProblem formulationWeights determinationBaseline