1 / 22

Even SWAPS, a Rational Method for Making Trade-Offs

Even SWAPS, a Rational Method for Making Trade-Offs. By Hammond, Keeney and Raiffa. Noora Pinjamaa and Sanna Tiilikainen. Decision-making problems & the promise of SWAPs. Decisions are difficult due to: Having only one objective is a rare luxury

lorene
Download Presentation

Even SWAPS, a Rational Method for Making Trade-Offs

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Even SWAPS, a Rational Method for MakingTrade-Offs By Hammond, Keeney and Raiffa Noora Pinjamaa and SannaTiilikainen

  2. Decision-making problems& the promise of SWAPs Decisions are difficult due to: Having only one objective is a rare luxury Each objective has its own basis of comparison You're not just trading off apples and oranges  you're trading off apples and oranges and elephants Why SWAP? The promise: To simplify complex decisions, start by simplifying the trade-offs

  3. How to SWAP: When having a complex problem, start by creating a “Consequence table” • How to do it: • List your alternatives • List consequences (use consistent terms) •  Do this for each of your objectives

  4. Example: A Consequences table for choosing a new job Most wanted: Flexibility, good salary

  5. Why do a consequences table? • Without a consequences tableimportant information can be overlooked and trade-offs can be made haphazardly • A consequences table makes all the information visible simultaneously

  6. Using a Consequences table for reducing the number of options to choose from 1/2 • Next step: (subjective) • Eliminate dominated alternatives • = lower in the ranking for you • Start by looking for • “practical dominance” • = lower value for you in practice

  7. Using a Consequences table for reducing the number of options to choose from 2/2 • Still too many options left? • Next step: • Rank objectives in each alternative • use numbers if you can

  8. From Consequences table to a ranking table

  9. Is this working? Keep looking for alternatives that have only one advantage etc.. But ..this is probably not enough, if you are faced with a complex decision

  10. Time to bring in the even SWAP • Process: (mechanical) • First, determine the change necessaryto cancel out an objective • Second, assess what change in another objective would compensate • Basically: “How many bananas would you • have to pay to get one orange” • Note1: you do not need to prefer oranges to do this, • just use the prices/kilo for comparison • Note2: you need to know the prices/kilo to do this

  11. Example: Making profit vs. market share “even” for a SWAP Objective: To Franchise or not, when you want maximum profit and increase in market share

  12. How to do it: Making question profit vs. market share “even” for a SWAP Question1: How many % increase in market share would you gain if you reduced your profit from 25 to 10? Question2: Profits being even, which % dominates (=is bigger)?

  13. The question is again:Is this working?(in real life, with no “price tags” attached ) Answer: You can keep on doing SWAPs, but calculating can only bring you so far Next step: Real-life situations need subjective valuations

  14. Getting closer to the real life 1/5Objective:Renting optimal office space(Both personal and customer demands) Answer: You can keep on doing SWAPs, but calculating can only bring you so far Next step: Real-life situations need subjective valuations

  15. Getting closer to the real life 2/5Ranking table used, and still too many options left

  16. Getting closer to the real life 3/5..still too many options left Time to bring in the subjective even SWAPs: -”evening” the commuting time and customer access to eliminate commute

  17. Getting closer to the real life 4/5..still too many options left Time to “even” office services and monthly cost, to eliminate services + one alternative(Baranov is “dominated”)

  18. Getting closer to the real life 5/5..still too many options left Final countdown: “Even” office size and monthly cost … And you have awinner! (Montana)

  19. The question is again:Is this working? Answer: -you will need some guidelines Next step: -Have a look at these and decide

  20. How to do it in real life • “The art of the SWAP” • (advice from the authors) • Determining the relative value of different consequences – the essence of any trade-off process-is the hard part • Every swap is unique, requiring subjective judgment • Make the easier swap first • Concentrate on the amount of the swap, not on the apparent importance of the overall objective • Concentrate on the importance of the amount in question

  21. Conclusions • (From the authors) • Goal of the method: Simplify the trade-offs • Remember that the value of an incremental change depends on what you start with • Even after the method you need to deal with subjective decisions • Seek out solid information • Make consistent swaps

  22. The question is again:Is this working? • Question: • What do you think?

More Related