(In)consistency of the Selection of the Method of Multiplicative Decision-Making
Journal Title: Acta Economica - Year 2018, Vol 16, Issue 29
Abstract
The paper analyzes the main causes of the (in)consistency of the selected method of multiplicative decision-making: data normalization, weight coefficients and the application of the Likert scale for the purpose of measuring quantitative attributes. Normalized data in the methods of multitributive decision making represents the substitute for a subjective attribute ratings by decision makers. Since they are calculated on the basis of mathematical transformations of empirical data, one gains the impression that the choices basen on normalized values are „objective”. Therefore, the sensitivity analysis of the results has dealt exclusively with effects of weight coefficients on the final choices so far, while the potential impact of normalization is complitely ignored; meanwhile, the deformations caused by the normalization of data have been attributed to the effects of weight coefficients and their inevitable subjectivism. We intent to point out at the deformations of empirical values that are the result of normalization and which call into question the application of normalized values as a decision base. It can be proven that the normalized values are an unrealiable information base for decision-making. In addition, the (in)consistency of selection methods of multi-attributive decision-making is also influenced by changes in the method of measuring and formulating attributes.
Authors and Affiliations
Katarina Račić, BSc, Željko V. Račić, PhD
The Detection and Prevention of Financial Frauds in Order to Strengthen the Financial Performance of Companies in Republic of Srpska
The global trends, economic and fnancial crisis, as well as numerous corporate and banking scandals and downs caused by fnancial frauds require review and active advancement of former theoretical postulates and professio...
CONTROVERSIONS ON THE ROLE OF AUDITORS IN PREVENTING AND DISCOVERING FRAUDS
Since the forties of the last century, there has been a continuous discussion on the role of auditors in preventing and discovering frauds. It arises from the gap between what auditors believe they should and can offer w...
UNIVЕRSITY STUDENTS’ ЕNTRЕPRЕNЕURIAL INTENTIONS: INSIGHTS FROM BIH (REPUBLIC OF SRPSKA)
This paper analytically presents the factors of entrepreneurial intentions of students in Bosnia and Herzegovina (BiH). The research problem can be defined by the question whether today a university can be called an “ent...
HAS THE "GOLDEN ROOM" BECOME A REALITY?
What Will Be: How the New World of Information Will Change Our Lives?” is the title of the book, but also a questin raised by its author, Michael Dertouzos, the director of the laboratory for computer science at MIT. Let...
Impact of Business Performance Indicators on Share Prices on Stock Exchanges in Bosnia and Herzegovina
Business performance indicators resulting from ratio analysis are one of the key benchmarks of investment analysis on capital markets, both developed countries and countries with emerging markets. Direct and positive rel...