Preference and veto thresholds in multicriteria analysis based on stochastic dominance

Abstract

In the paper, a discrete stochastic multiattribute problem is considered. It is assumed that the performance probability distribution for each alternative on each attribute is known. Stochastic dominance approach is employed in comparing evaluations of alternatives with respect to attributes. The concept of pseudo-criteria is employed. We assume that three situations can be considered when preferences are modeled with respect to single attribute: strict preference, weak preference and indifference. Preference threshold is used to distinguish situations of strict and weak preference. ELECTRE-III distillation procedures are employed in construction of multiattribute ranking. The approach could be an appropriate method, e.g. in finance, insurance and production process control.