Logical Decisions - Classweb

Figure 9-5 summarizes the process of SUF assessment using the
mid-level splitting method. In box 1, the decision maker is asked
which change is more preferred, one from 80 to 110 hp or one
from 110 to 180 hp.
In box 2, the decision maker answers that the changes are equally
preferred. This implies that 110 is the mid-preference level for the
range from 80 to 180 hp.
In box 3, we assign utilities to the three levels. the least preferred
level of 80 hp is assigned U = 0 by definition. The most preferred
level 180 is assigned U = 1, also by definition. The mid-preference
level of 110 is assigned the average of the two other utilities or U =
0.5.
In box 4, a graph of utility vs. horsepower is shown with a smooth
curve fit between the three known points. This curve defines a
SUF for horsepower for the range 80 to 160 hp.
Note that technically a preference function assessed using the
mid-level splitting technique should be called a measurable value
function rather than a utility function.
Disadvantages of the Mid-level Splitting Method. The midlevel
splitting method is difficult to use if your measure scale is
not continuous. For example, if a measure consists of, say, five
specially defined scale points, it may not be the case that one
point is the mid-preference level between two others. In addition,
the requirement of using changes in levels rather than the levels
directly is difficult for some decision makers. If either of these
problems arises it may be easier to use the probability method
described below.
SUF Assessment Using Probabilities. The second approach for
assessing SUFs involves asking questions that involve uncertain
levels of the measure for some hypothetical alternatives. The
probability assessment method is implemented in LDW as the
SUF::Assess Utility option.
The general idea is to find an alternative with a certain (point
estimate) level on a measure that is equally preferred to an
alternative with well-defined probabilities of having two different
levels, each of whose utilities is known.
As an example, we will use the resale value of the truck after
three years (as a percentage of its purchase price). We could
9-22 Section 9 -- In Depth