Intentional bounded rationality methodology to assess the quality of decision-making approaches with latent alternative performances

Abstract

Expert’s judgments have been crucial in the development of decision theory; however, what criterion to use in the selection of experts remains an issue to address. Decision support techniques proposed to improve the quality of expert judgment decision making consider a demonstrated inconsistency of the judgments expressed by an expert as a criterion of exclusion in the decision-making process of such expert. Although consistency appears to be a desirable condition to qualify as “expert”, little is known about the quality of the decisions made imposing consistency as the expert qualifying condition. This paper proposes a simulation methodology, based on an automaton programmed to make decisions in an intended but bounded rational way, to assess the cost-benefit of different aspects of decision support techniques. Within this methodology, the imposition of the consistency condition in the selection of experts is studied. In particular, the paper shows with a case study example that the Analytical hierarchy process (AHP) decision support technique expected payoff is at most 5% higher when implementing Saaty’s consistency criterion of the expert’s judgments than when the consistency criterion is not considered.