Dealing with Uncertainties in MCDA

Theodor Stewart, Ian Durbach

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

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Abstract

This chapter presents various approaches to incorporating formal
modelling of risks and uncertainties into multi-criteria decision analysis,
in a theoretically valid but also operationally meaningful manner. We
consider both internal uncertainties (in the formulation and modelling
of the decision problem), and external uncertainties arising from
exogenous factors, but with greater attention paid to the latter. After
a broad discussion on the meaning of uncertainty, we first review
approaches to sensitivity analysis, which is particularly, although not
exclusively, relevant to internal uncertainties. We discuss the role,
but also some limitations, of representing uncertainties in formal
probabilistic structures, linked also to concepts of expected (multiattribute) utility theory. Such probability/utility approaches may be used
in explicitly identifying a most preferred solution, or simply to eliminate
certain courses of action when stochastically dominated (in various
senses) by others. In some contexts it may be useful to view minimization
of various risk measures as additional criteria in more standard MCDA
models, and we comment on advantages and disadvantages of such
approaches. Finally we discuss the integration of MCDA with scenario
planning, in order to deal with deeper uncertainties (not easily if at all
representable by probability models), particularly in a strategic planning
context. The emphasis throughout is on the practice of MCDA rather than
on esoteric theoretical results.
Original languageEnglish
Title of host publicationMultiple Criteria Decision Analysis: Satte of the Art Surveys
EditorsSalvatore Greco, Matthias Ehrgott, Jose Figueira
Place of PublicationNew York
PublisherSpringer Nature
Pages467-496
Number of pages32
ISBN (Electronic)978-1-4939-3094-4
ISBN (Print)978-1-4939-3093-7
DOIs
Publication statusPublished - 2016

Publication series

NameInternational Series in Operations Research & Management Science
PublisherSpringer
Volume233
ISSN (Print)0884-8289
ISSN (Electronic)2214-7934

Keywords

  • mrilticriteria decision analysis

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