Value Focused Thinking 101

The Mechanics

Mike Bailey
asst. by Matt Aylward, Greg Parnell (by extension)

Keeney, Ralph L. 1992. Value-Focused Thinking, A Path to

Creative Decisionmaking. Harvard University Press,
Cambridge, Mass.
 Value-Focused Thinking
• A.K.A. Multi-Objective Decision Analysis (MODA)
• Descendant of Saul Gaas’s Analytical Hierarchical
Processes (AHP), and prior methods
• Amalgamate and Balance incomparable Desired
Properties
• I want a car that’s…fast, fun, cheap, cool, roomy, easy
to take care of, red, with a bike rack, long-lasting…
– How do you score cars to get the right balance?
– What if the right balance is being determined by a group
(possibly experts)?
• Discussion on application in a group of experts…Keeney
 MECHANICS
• Skip all of the VFT Theology
• Focus on how to EXECUTE
– Construction of the Value Tree
– Calculation of Value Weights
– Evaluation of an Alternative
• Motivated by a simple example: Selecting
a College
 BUILDING THE VALUE TREE
• Structure important issues into a two-layer
tree…
– Values (Functions)
– Characteristics (Tasks)

Pick the
Best College

V1. Price V2. Selectivity V3. Livability

 THE VALUE TREE
Pick the
Best College

V2. Selectivity V3. Livability

V1. Price
 THE VALUE TREE
Pick the
Best College

V2. Selectivity
FUNCTIONS V3. Livability
V1. Price

TASKS
 BUILDING THE VALUE
FUNCTION
• Each measure’s importance is weighted
for its contribution
• Each alternative is measured against each
measure

VFT Practice: Weights done before measurements. Try to keep the

participants away from the alternatives for as long as possible.
 WEIGHTS
• Have each participant individually rank order
the measures
• For our example
1. Tuition
2. Housing
3. Peterson
4. Proximity
5. SAT avg
6. BBall Rank
7. Cool
8. Living Expenses
9. Bars
 PAIRWISE PREFERENCE
MATRIX
1.1 1.2 1.3 2.1 2.2 3.1 3.2 3.3 3.4

1.1 0 1 1 1 1 1 1 1 1

1.2 0 0 1 1 1 1 1 1 1

1.3 0 0 0 0 0 0 1 0 0

2.1 0 0 1 0 1 1 1 1 1

2.2 0 0 1 0 0 0 1 0 1

3.1 0 0 1 0 1 0 1 0 1

3.2 0 0 0 0 0 0 0 0 0

3.3 0 0 1 0 1 1 1 0 1

3.4 0 0 1 0 0 0 1 0 0
 BUILDING UP WEIGHTS
• P = sum of all preference matrix elements
– Something close to n2/2
• Si = number of times option i preferred
– ith row sum of matrix P
• Rank the measures by Si
• Build clumps (3-6 clumps)
COLLEGE EXAMPLE
Tuition 19

Housing 14

Peterson 12

Prox to Home 12

SAT Score 11

BBall Team 9

Cool 8

Living Expenses 8

Bars 2
 VARIABILITY
• Judgment call
• Made by Analyst, not Participants
• High/Medium/Low
• How much variability in the measure is
present in the options being considered?
– Tuition: $8,500 to $38,000 [HIGH]
– Proximity: 1hr to 6hr [LOW]
– SAT’s: 1050 to 1200 [LOW]
 WEIGHT MATRIX
Importance
High Med Low
Variance

100 97 95
High
95 92 85
Med
70 60 30
Low

>> Pre-assign numerical weights to each cell. Bin the metrics

according to Importance and Variability.
>> Enforce Monotonicity.
 MEASUREMENT
• Now we consider each alternative
• We will build a utility curve for each metric
– Translates a measurable (X) onto a [0,1] utility
value (Y) over the range of the alternatives
• We will measure each alternative’s utility
value
 Key Concept: Families of Curves
• Linear • Concave
– Each unit of X – Initially, increments
returns one unit of of X return less
Y than one unit of Y
Y MPH
Y Payload
X
• Convex • S-Curve
X
– Initially, increments – Combines convex
of X return multiple and concave
units of Y

Y H2O Prod.
Y Concealment

X X
UTILITY CURVE: TUITION

COST UTILITY CURVE

0.9
0.8
0.7
0.6
UTILITY

0.5
0.4
0.3

0.2
0.1

0
8 13 18 23 28 33
COST

This can get fancy, but a line through a few points is AOK.
 ROANOKE COLLEGE
BIN WEIGHT SCORE TOTAL
Tuition 19 H/H 100 0.3 30
Housing 14 L/M 60 0.5 30
Peterson 12 M/M 92 0.4 36.8
Prox to Home 12 L/M 60 0.2 12
SAT Score 11 L/M 60 0.5 30
BBall Team 9 H/L 90 0.2 18
Cool 8 M/L 85 0.9 76.5
Living Expenses 8 M/L 85 0.9 76.5
Bars 2 ?/VL 0 0.9 0

SCORE 309.8
 FINAL LAP
• Score each alternative on each measure
• Take the weighted sum
• That’s the alternative’s score
• FINE’ !
 SOME ISSUES TO
WATCH OUT FOR
• Interdependent measures
– Peterson guide and SAT Avg
– Guidance: Work to indentify aggregated but objective measures
that are independent
• Value’s influence
– More component measures leads to unintentionally over/under
emphasis of a specific value
– Guidance: Establish a number (3) of measures per Value
• Arbitrary weights
– Weight matrix can be unbalanced or overbalanced
– Do sensitivity analysis in the open
• Filtering
– Delete (not just weight = 0) infeasible alternatives
– E.g. a tuition you just can’t/won’t pay