MILA MUJAADILAH

29115053
DECISION MAKING

RESUME CHAPTER 13 DECISIONS INVOLVING GROUP OR

INDIVIDUAL
This chapter describes and evaluates ways of combining individual
judgments to produce improved judgments. There are essentially two
approaches to the problem: mathematical and behavioral aggregation.
Mathematical aggregation, involves techniques such as the calculation of a
simple average of the judgments of the individual group members. In
behavioral aggregation a group judgment is reached by members of the
group communicating with each other either in open discussion or via a more
structured communication process.
Mathematical Aggregation
There are a number of advantages to be gained by using mathematical
aggregation to combine the judgments of the individual members of a group.
In particular, the methods involved are relatively straightforward. For
example, we might ask each member of a group to estimate the probability
that the sales of a product will exceed 10000 units next year and then
calculate a simple average of their estimates. This means that the more
complex and time-consuming procedures of behavioral aggregation are
avoided. Moreover, the group members do not have to meet. Their
judgments can be elicited by telephone, post or computer and therefore the
influence of dominant group members is avoided.
Aggregation Judgment 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
model which was too complex to be useful. Two methods of combining
individual estimates of unknown quantities are considered below.
a. Taking a simple average of the individual judgments
If the situation where the individual group judgments can be regarded
as being unbiased, with each persons estimate being equal to the
true value plus a random error which is independent of the errors of
the other estimates. In these circumstances it can be shown that
taking the simple average of the individual estimates is the best way
of aggregating the judgments. The reliability of this group average will
improve as the group size increases because the random error
inherent in each judgment will be averaged out. However, each
additional member of the group will bring progressively smaller
improvements in reliability, so that a point will be reached where it will
not be worth the effort or cost of extending the group because a

MILA MUJAADILAH
29115053
DECISION MAKING

sufficiently reliable estimate can be achieved with the existing

membership.
b. Taking a weighted average of the individual judgments
When some members of the group are considered to be better judges
than others then it may be worth attaching a higher weight to their
estimates and using a weighted average to represent the group
judgment. But using weighted averages is that the judgmental skills of
the group members need to be assessed in order to obtain the
weights. Methods which have been proposed fall into three categories:
self-rating, rating of each individual by the whole group (see, for
example, De Groot3) and rating based on past performance.
Aggregating Probability Judgments
The most pragmatic approach to aggregating probabilities would appear
to be the most straightforward, namely, to take a simple average of
individual probabilities. This method may not be ideal, but as von Winterfeldt
and Edwards put it: The odds seem excellent that, if you do anything more
complex, you will simply be wasting your effort.
Aggregating Preference Judgments
Theres two option when a group of individuals have to choose between a
number of alternative courses of action is it possible which is Aggregating
preference orderings and aggregate value utilities.
a. Aggregating preference orderings
There is a satisfactory method for determining group preferences
when the preferences of individual members are expressed as
orderings. There four conditions which can considered that a
satisfactory procedure should meet:
(1) The method must produce a transitive group preference order for
the options being considered.
(2) If every member of the group prefers one option to another then
so must the group. (You will recall that this condition was not fulfilled
in the production manager/accountants problem which we considered
earlier.)
(3) The group choice between two options, A and B, depends only
upon the preferences of members between these options and not on
preferences for any other option. (If this is not the case then, as we
saw above, an individual can influence the group ordering by lying
about his preferences.)
(4) There is no dictator. No individual is able to impose his or her
preferences on the group.

MILA MUJAADILAH
29115053
DECISION MAKING

In Ferrel well-known Impossibility Theorem Arrow proved that no

aggregation procedure can guarantee to satisfy all four conditions. It
suggests that it is impossible to derive a truly democratic system for
resolving differences of opinion. Any method which is tried will have
some shortcoming.
b. Aggregate Value Utilities
It is important to note that Arrows Impossibility Theorem refers only
to situations where individuals have stated the order of their
preferences. A statement giving an individuals preference order does
not tell you about that persons intensity of preference for the
alternatives. The derivation of individual values and utilities can help
each group member to clarify his or her personal understanding of the
problem and also to achieve a greater appreciation of the views of
other members. Sensitivity analysis can then be used to test the
effect of using individual values and utilities. This may reveal, for
example, that certain options are to be preferred to others,
irrespective of which individuals utility function is used.
Unstructured Group Processes
One of the major conclusions of research work on descriptions of group
decision making is that of well-documented shortcomings. The presence of
powerful individuals can inhibit the contribution of those who are lower down
the hierarchy. Groupthink is essentially the suppression of ideas that are
critical of the direction in which a group is moving. It is reflected in a
tendency to concur with the position or views that are perceived to be
favored by the group.
Structure Group Processes
Awareness of the factors that can degrade group decision making
combined with the implicit belief that group judgment can potentially
enhance decision making has led to a number of structured methods to
enhance group decision making by removing or restricting interpersonal
interaction and controlling information flow. One such major method has
been Delphi Essentially, Delphi consists of an iterative process for making
quantitative judgments. The phases of Delphi are:
1) Panelists provide opinions about the likelihood of future events, or
when those events will occur, or what the impact of such event(s)
will be. These opinions are often given as responses to
questionnaires which are completed individually by members of the
panel.
2) The results of this polling of panelists are then tallied and statistical
feedback of the whole panels opinions (e.g. range or medians) are

MILA MUJAADILAH
29115053
DECISION MAKING

provided to individual panelists before a repolling takes place. At

this stage, anonymous discussion (often in written form) may occur
so that dissenting opinion is aired.
3) The output of the Delphi technique is a quantified group
consensus which is usually expressed as the median response of
the group of panelists.
Decision Conferencing
Decision conferencing was invented in the late 1970s by Cameron
Peterson at a US-based consulting firm called Decision and Designs
Incorporated. Essentially, decision conferencing brings together decision
analysis, group processes and information technology over an intensive twoor three-day session attended by people who wish to resolve a complex issue
or decision. In the background another decision analyst uses interactive
decision-aiding technology to model individual and group views on such
issues as multi-attribute option evaluation and resource allocation.