Downloadable - About University

Aggregating judgments in general 311
Table 12.1 – The production manager’s utilities and probabilities
Average sales levels
Action High Low
(Utilities)
Expected utility
Buy high-volume processor 1.0 0 0.4
Buy low-volume processor 0.1 0.62 0.412
Probabilities 0.4 0.6
Table 12.2 – The accountant’s utilities and probabilities
Average sales levels
Action High Low
(Utilities)
Expected utility
Buy high-volume processor 1.0 0 0.5
Buy low-volume processor 0.52 0.5 0.51
Probabilities 0.5 0.5
Table 12.3 – The average of the utilities and probabilities
Average sales levels
Action High Low
(Utilities)
Expected utility
Buy high-volume processor 1.0 0 0.45
Buy low-volume processor 0.31 0.56 0.4475
Probabilities 0.45 0.55
individuals, we arrive at the figures in Table 12.3. If these figures are
used to make the decision it can be seen that the ‘preferred’ group choice
is the high-volume processor, despite the fact that both individuals
prefer the low-volume one! We will discuss later whether it is valid or
meaningful to average subjective probabilities or utilities, but first let us
consider methods which can be used to aggregate judgments in general.
Aggregating judgments in general
Single-value estimates of factors such as costs, sales or times to complete
a project are often used in decision analysis models when the use of
a probability distribution for every unknown quantity would lead to a