MANAGEMENT SCIENCE Vol 33, No 11.

November 1987

Printed w USA

THE THEORY OF RATIO SCALE ESTIMATION: SAATY'S ANALYTIC HIERARCHY PROCESS*

PATRICK T. HARKER AND LUIS G. VARGAS The Wharton School, Umversily of Pennsylvania, Philadelphta, Pennsylvania 19104 Graduate School of Business, University of Pittsburgh, Ptttsburgh, Pennsylvania 15260
The Analytic Hierarchy Process developed by Saaty (1980) has proven to be an extremely useful method for decision making and planning. However, some researchers in these areas have raised concerns over the theoretical basis underlymg this process. This paper addresses currently debated issues concerning the theoretical foundations of the Analytic Hierarchy Process. We also illustrate through proof and through examples the validity or fallaciousness of these criticisms. (DECISION THEORY; ANALYTIC HIERARCHY PROCESS; RATIO SCALES)

1. Introduction Ever since Saaty's development of the Analytic Hierarchy Process (AHP) in the 1970s, numerous books and papers have been written concerning its theory and its applications. The three major books dealing with the theory and application of this method are: The Analytic Hierarchy Process {Saaty 1980), Decision Making for Leaders (Saaty 1982), and The Logic of Priorities (Saaty and Vargas 1982). Some ofthe articles appearing in the operations research/management science (OR/MS) literature include the papers by Saaty (1977, 1983), Wind and Saaty (1980), Cook et al. (1984), Saaty and Gholamnezhad (1982), Vargas (1983), Saaty and Vargas (1979), Mitchell and Soye (1983), Wasil et al. (1983), Golden et al. (1986), Hamalainen (1985), and Harker (1986). In addition to these publications, several government agencies, consulting firms and corporations are currently using the AHP on a routine basis to analyze complex policy/planning issues; the paper by Zahedi (1986) provides an excellent review of this literature. Recent articles (Belton and Gear 1983, 1985; Dyer and Wendell 1985), however, have attacked the AHP on the grounds that it lacks a firm theoretical basis and, hence, it should not be considered a "correct" method to analyze decisions or, in general, systems. Furthermore, the acceptance of this method has been slowed by what we believe to be (a) misunderstandings of its theoretical foundations, and (b) a reluctance to move away from traditional methods of analysis such as the Delphi technique,

multi-attribute utility theory and Edward's SMART technique. In this paper we shall
focus on the former, namely, the misunderstandings ofthe theoretical basis ofthe AHP, and hopefully will address the latter through our discussion of the AHP's merits and shortcomings. To begin, let us briefly define what the AHP is and its essential elements. The AHP is a comprehensive framework which is designed to cope with the intuitive, the rational, and the irrational when we make multiobjective, multicriterion and multiactor decisions with and without certainty for any number of alternatives. It is a method for deriving ratio scales used to integrate our procedure for representing the elements of any problem. It organizes the basic rationality by breaking down a problem into its smaller constituent parts and then calls for only simple pairwise comparison judgments to develop priorities in each hierarchy.

* Accepted by Ambar G. Rao, former Departmental Editor; received December 1985. This paper has been with the authors 1 \ months for I revision.

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Copynghi e< 1987. The Inslilulc oT Managemcnl Sacnocs

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PATRICK T, HARKER AND LUIS G, VARGAS

There are three principles which one can recognize in problem solving: (I) Decomposition, (II) Comparative Judgments, and (III) Synthesis of Priorities. The decomposition principle calls for structuring the hierarchy to capture the basic elements of the problem. The principle of comparative judgment calls for setting up a matrix to carry out pairwise comparisons ofthe relative importance ofthe elements in a level with respect to the elements in the level immediately above it. This matrix is used to generate a ratio scale. Finally, the principle of synthesis of priorities is used to generate the global or composite priority of the elements at the lowest level of the hierarchy. In addition, the AHP contains an intrinsic measure of inconsistency for each matrix and for the whole hierarchy. Knowledge of inconsistency enables one to determine those judgments that need reassessment. In this sense, the AHP deviates radically from the more traditional decision analytic methods in that the latter have no formal way of dealing with inconsistencies. Rather, these methods rely on the decision analyst's ad hoc rules for the reconciliation of inconsistencies in judgments; Belton (1986) recently made this point in comparing the AHP and simple multi-attribute value functions. There are essentially four areas in which the AHP has been criticized: lack of an axiomatic foundation, ambiguity ofthe questions that the decision maker must answer, the scale used to measure the intensity of preference, and the Principle of Hierarchical Composition and rank reversal. Our purpose in this paper is to address theoretical issues related to whether or not the AHP is a valid and acceptable method of ehciting and analyzing subjective judgments, and not whether subjectivity should be incorporated into OR/MS analyses of any type. We shall assume that the reader recognizes the necessity of such subjective judgment in the modelling of complex socio-economic phenomena as well as within the traditional boundaries of decision analysis. This paper summarizes the results of many published and unpublished papers; thus, many of the proofs are omitted but mention will be made to the appropriate references where these proofs can be found. The next section reviews the axiomatic foundation of

the AHP. 3 addresses the issue of iht frame of reference in which subjective judgments
are made in terms of these axioms. In both of these sections comparisons and contrasts are made with traditional utility theory and other measurement theories. 4 presents arguments for and against the measurement scale used in the AHP, emphasizing the 1 to 9 scale proposed by Saaty (1980), The cardinal measurement of preferences, as defined in the axioms, is shown to be fully represented by the eigenvector method proposed by Saaty. The arguments are based on a graph theoretic approach presented in 5. In 6 we use a similar argument to show the validity of hierarchic composition and the notion of systems with feedback (see Saaty 1980, Chapter 8). Finally, in 7 we review other problems which concern the method and outline a plan of research to address these problems and extend the basic methodology. 2. Axiomatic Treatment of the AHP

The first major criticism of the AHP is that this method lacks an axiomatic foundation. However, Saaty (1986) has provided such a foundation. The purpose of this section is to review Saaty's axioms and to interpret their meanings in light ofthe current criticisms of this method. To begin with, Saaty (1986) defines a set of primitive notions in which the axioms are based; they are: (1) Attributes or Properties. A is the finite set of n elements called alternatives and Ct is the set of properties or attributes vth which the elements of A are compared. Philosophers often make a distinction between properties and attributes, but we shall treat them as interchangeable and refer to them as criteria.

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(2) Binary Relation. When two objects are compared according to a property, we say that one is performing binary comparisons. The binary relation >c represents "more preferred than" according to a property C. The binary relation ~ c represents "indifferent to" according to the property C. (3) Fundamental Scale. Let P denote the set of mappings from A X A io R^, f.<l-*P, and Pc e / ( C ) for C G . Thus, every pair {A,, Aj) E A X A canhe assigned a positive real number Pc{A,, Aj) = a,j that represents the relative intensity with which an individual perceives a property CG in an element^, G ^ in relation to other^^ G A:

A, >cAj if and only ifPdA,, Aj)> I. A, ~cAj if and only if Pc(A,,Aj) = 1.

Using these primitive notions, Saaty (1986) has defined four axioms on which the AHP is based. Rather than stating these axioms in their full mathematical form, we shall paraphrase them in order to state tbeir basic meaning. Axiom 1 (The Reciprocal Condition). Given any two alternatives iA,,Aj)E.AX A, the intensity of preference of^, over^^y is inversely related to tbe intensity of preference

of AJ o\eT A,: PAA., AJ) = l/PAAj, A,), VA,, AjSA, CEd.

DEHNITION I. A hierarchy ^ i s a partially ordered set witb largest element b which satisfies the conditions: (1) Tbere exists a partition of .^into levels [Lk, fc = 1, 2 h}, Li = {b}. (2) If X is an element ofthe Ath level (x L^), then the set of elements "below" x (jc~ = {y\x covers y}, k = 1,2, . . ., h = 1) is a subset ofthe {k -i- l)st level (JC" C Lk+^). (3) If X is an element ofthe Atb level, then the set of elements "above" x (x^ = {y\y covers x}, A = 2, 3, .. ., A) is a subset ofthe (k - l)st level {x^ i^yt-i): DEFINITION 2. Given a positive real number p > 1 a nonempty set x~ ^ L^+i is said to be p-homogeneous with respect io X E Li^ if

1 /p < Pc(yi ,y2)^P

for all >',, ; ^ e ^". 2

Axiom 2 (p-homogeneity). Given a hierarchy ^, x E ^ and x G Z.* C ^ , then x~ c ^.^, is p-homogeneous for all A: = \,2, . .. ,h- 1. This axiom is somewhat equivalent to tbe archimedean property. Krantz et al. (1971, pp. 25-26) write:
. . . a rattier odd axiom is usually stated as part of each system. It is Archimedean because it corresponds to the Archimedean property of reat numbers: for any positive numtier x, no matter how small, and any number y, no matter how targe, there exists an integer n such that fix's, y. This simply means that any two positive numtjers are comparable, i.e.. their ratio is not infinite. Another way to say this, one which generalizes more readily to qualitative structures, is that the set of integers for which x < y is a finite s e t . . . Then the Archimedean axiom says that for any b, the set of integers n for which fc > na is finite. It is evident that since the Archimedean property is true ofthe real numbers, it must also be true within the empirical relational system; it is a necessary axiom. What is surprising is that it is a needed axiom. In the few cases where the independence of axioms has been studied, the Archimedean axiom has been found to be independent of others; and no one seems to have suggested a more satisfactory substitute. It can be deleted if quite strong structural assumptions are made . . . , but with our relatively weak structural assumptions, we do not know how to eliminate it in favor of more desirable necessary axioms. The objection to it as a necessary axiom is that either it is trivially true in a finite structure . . . or it is unclear what constitutes empirical evidence against it since it may not be possible to exhibit an infinite standard sequence.

Tbus, (1) When comparing two elements according to a criterion a bounded scale is sufficient, and

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PATRICK T. HARKER AND LUIS G. VARGAS

(2) Ratio comparisons follow directly from the archimedean property as no other numerical comparison does. DEHNITION 3. A set of .yl is said to be outer dependent on a set 6 if a fundamental scale can be defined on A with respect to every C E . DEHNITION 4. Let A be outer dependent on . The elements in A are said to be inner dependent (independent) with respect to C E if for some (all) ^ E ^ , .^ is outer dependent (independent) on A. Axiom 3 (Dependence). Let ^ b e a hierarchy with levels, Li, Li,. . ., L/,. For each L,,k=l,2,...,h-\. (1) Lk+] is outer dependent on L/,. (2) Lfc+i is inner dependent with respect to all x E Z.^(3) Lk is outer dependent of L^+i. DEHNITION 5. Expectations are beliefs about the rank of alternatives derived from prior knowledge. Axiom 4 (Expectations). All criteria and alternatives are represented in the hierarchy; i.e., (E C ^ Lh, A = Lh. Thus, all expectations must be represented (or excluded) in terms of criteria and alternatives in the structure, and assigned priorities compatible with the expectations. The first axiom derives from the intuitive idea that i(A is five times heavier than B, then it must be the case that B is one fifth as heavy as A. The second axiom which deals with homogeneity simply states that individuals are only capable of expressing meaningful intensities of preference if the elements are comparable. Clearly, it is very difficult to make meaningful comparisons of the weights of the sun and an atom; our cognitive capabilities do not permit such comparisons between vastly differing objects. Thus, this axiom simply states that the elements of a particular level in a hierarchy .fmust be comparable. If one is faced with a situation in which comparisons must be made between objects which are very different, the objects should be clustered into homogeneous bundles and then the bundles can be compared at a higher level of .^. The third axiom deals with the ability to make comparisons in a hierarchical structure. Simply stated, this axiom says that such comparisons are possible when a set of elements L^+i is to be compared in terms of an element in the next highest level (e.g., comparing alternatives in terms of a particular criteria or subcriteria). Obviously, there are situations where the alternatives depend on the alternatives and vice versa. In this general system, called a system with feedback in the AHP literature, there is not only the concept of outer dependence but also the concept inner dependence as defined by Saaty (1986). Thus the theory can be generalized to more than hierarchical structures, as we shall discuss in 6; the interested reader is also directed to the recent paper by Saaty and Takizawa (1986) where these concepts are explored in detail and an example of a system with interdependence is given. The final point to be made before closing this section concerns Axiom 4. The main purpose of this axiom is to deal with issues related to the addition of new alternatives to A. or when alternatives are removed from the set. Consider for a moment the case where a copy of one of the alternatives is added to A. Axiom 4 essentially states that new criteria must be added to . For example, Saaty and Takizawa (1986) argue that if an apple and an orange were being compared and one adds another apple to the set, a new criterion such as "the number of elements of a certain type (number of apples and number of oranges)" should be added to the hierarchy to preserve one's expectations, and thus one should alter the criteria set and the priorities assigned to them. If one rigidly adheres to the previous set of criteria and priorities, then an exact replica or copy of an alternative should never be added according to Axiom 4. This axiom of expectations also implies that any alternative Aj which is not a true alternative, in the sense that some other alternative .^, E ^ is completely equivalent to

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Aj over all criteria, should be removed from the choice problem since it adds nothing to the choice set. For example, were we comparing alternative A (e.g., a blue Mercedes) and alternative B (e.g., a Chrysler) and a copy of A with respect to the given criteria (e.g., a red Mercedes where color is not a criterion), this copy should be removed since the preferences otA versus B will automatically give us the preferences of .B versus all copies of A by the indiflFerence relationship ~ c ; i.e., A must be indiflFerent to all its copies. Thus, only the real choices should remain in the set A. However, in order to believe that two alternatives are copies, we must believe that there exist no criteria on which one could differentiate between these two alternatives, or that is complete. If one such criterion did exist, such as "the number of elements," its addition to would cause the two alternatives not to be copies. If ^ ^c B, and no criteria are added to when copies to A are added to JL, one could always find the number of copies of A that must be added to JL to have B ^c-^. which is not a true reflection of our preferences. Hence, if copies are added to JL, then new criteria must also be added to A. Therefore, an exact replica or a copy with respect to S should only be added if it adds a truly new alternative to the set A by either altering the set of criteria , or the priorities assigned to the criteria and the alternatives. 3. The Frame of Reference One of the most common criticisms of the AHP concerns the ambiguity of the question that the decision maker must answer. For example, Watson and Freeling (1983) write:
Our present criticism ofthe A H P is concerned only with this stage of analysis [of applying the method to real-world problems] . . . What sort of question needs to be asked to elicit the numbers in this matrix [of pairwise comparisons]? It would seem that they have to be o f t h e form: "Which is more significant, purchase price or maintenance cost per year?" . . . If this question is asked without further explanation, it is, we maintain, meaningless.

This problem of ambiguity is not a flaw of the AHP, but in fact arises out of a fundamental question concerning the frame of reference in which one makes the necessary subjective judgments. The meaning (of lack of meaning) of a question ultimately depends upon the cognitive environment in which one exists. One's belief as to the meaning of terms such as "more important" or "strongly more important" is a function of the cognitive frame of reference in which one currently resides. These definitions will vary from day to day and from individual to individual because this reference frame varies over time and individuals. While it is true that a poorly worded question yields poor results and that better wording of a question can significantly increase the effectiveness of the methods, no method or no perfect question will ever remove ambiguity completely due to the reliance on the individual's frame of reference. Watson and Freeling (1983) and others have criticized the mode of questioning outlined in Saaty's theory while not fully comprehending the above-mentioned issue or understanding that excessive ambiguity not explicable within the context of the frame of reference is not a failure ofthe method being used, but rather a failure ofthe analyst or decision maker to fully comprehend the issue at hand and state questions which meaningfully address it. Since according to theory, one's reference frame should not influence the way in which the question is answered, why should the frame of reference matter? For example, Stevens' law of measurement (1957) by ratio scales states that the value of this ratio should be invariant to the actual value of the numerator and denominator, i.e., only their ratio matter. However, even Stevens (1957, p. 153) recognizes that this assumption is only a first order approximation. In assessing classical utility functions, numer-

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PATRICK T, HARKER AND LUIS G, VARGAS

ous experiments by Tversky and others (Tversky and Kahneman 1981; Hershey et al. 1982; Hershey and Schoemaker 1983; Schoemaker and Wait 1982; ICrantz et al. 1971) have shown conclusively that one's frame of reference matters. For example, whether one is asked to adjust probabilities [probabUity equivalence] or the sure amount [certainty equivalence] in eliciting a von Neumann-Morgenstem utility function, although they are theoretically equivalent methods, they lead to different utility measurements (McCord and de Neufville 1984). Thus, the dependence of utility measurement on one's frame of reference is a well-established phenomenon. Even more striking evidence to support the claim that the frame of reference matters can be found in the geography literature. A favorite example which is often used to explain the AHP is Saaty's measurement of distance from Philadelphia to a set of other cities in the world (Saaty 1980, pp. 41-42). If we were to choose any other city, for example London, and ask the same relative distance questions from London, we should obtain the same relative distance measurement between Philadelphia and London as we did when using Philadelphia as our anchor point. However, the research by Professor GoUedge at the University of California, Santa Barbara, clearly shows that this should not be the case (see Smithsonian 1984). People's cognitive maps are fundamentally related to their anchor point or frame of reference, such as home and work locations. Spatial relations are highly distorted as we move away from one's frame of reference. Thus, a simple question such as "how far is points as compared to point B in reference to an anchor point" may be viewed as being an extremely ambiguous question if ^ and/or B are far removed from one's reference point. Finally, some colleagues have pointed out that there exist enough examples in the utility theory literature to show that the frame of reference introduces biases. However, these examples are not immediately applicable to the AHP because the theoretical computations and the mode of questioning are fundamentally different from the lottery-type question of multi-attribute utility theory (MAUT). It is an open research question as to what bias means in the context of the AHP. Tversky and Kahneman have been the leaders in the area of defining judgmental bias, but Kruglanski and his colleagues at Tel Aviv University, Israel, have begun to question the definition of what exactly bias means in their theory of "Lay Epistemology" (see Kruglanski and Ajzen 1983 and Snow 1984). Kruglanski's argument states that there are no secure criteria on which to judge bias, and that bias does not necessarily lead to errors in judgment. As Snow (1984, p. 523) notes: "Human-machine interactions designed on the assumption that the human side is rational, or that the human side is generally subject to certain biases, may also often be wrong. Thus, one can only recognize that reference points and the mode of questioning will, in general, affect the results ofthe decision and that one should not attempt to correct for these effects in any way other than to make the questions as clear as possible." Therefore, ambiguity is a phenomenon of all preference eliciting methods and, to a large extent, the reduction of ambiguity in the AHP is in the hands of the decision analyst. Clear definitions of the criteria, subcriteria and alternatives is essential in all decision aids and should obviously be of major concern to users of AHP or any other methodology. Thus, ambiguity is prevalent in all decision methodologies, not just the AHP, and simple corrections to account for bias as suggested by some researchers should be avoided due to the type of problems raised by Kruglanski. 4. The Scale of Measure One of the most controversial areas of the AHP concerns the scale used to measure the intensity of preferences, Pc{A,,Aj), between two altematives.,4,, ^yE A. This scale is defined to be a ratio scale, and it is assumed that the (cardinal) intensity of preference

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between two alternatives can be expressed using the scale. The use of a ratio scale in the AHP is a major departure from traditional methods of decision analysis which typically employ interval measures. Although there has been some criticism concerning the use of a ratio versus an interval scale, there is a large body of literature in psychology which readily accepts the use of a ratio scale in measuring the relative intensity of stimuli (Stevens 1957; Stevens and Galanter 1964; Krantz 1972). The major focus ofthe criticism lies in Saaty's 1 to 9 scale. This section addresses this issue. However, it should be noted from the outset that if one accepts the notion of a ratio scale and the axioms of 2, then Saaty's eigenvector and hierarchical composition methods are the correct method of synthesizing the pairwise judgments. Thus, the belief which some critics (Dyer and Wendell 1985) hold that the AHP is ad hoc is in fact false. The scale of measure may be subject to debate, but the mathematics behind the AHP follow directly from the axioms in 2. The first point that should be made concerning the scale of measure is that this issue arises in all preference inducing methods. For example, although the assumption of transitivity of preferences in utility theory leads one to conclude that utility is invariant up to a linear transformation in the von Neumann-Morgenstem case, which implies that utihty measurements are not affected by the actual numerical scale used in the measurement process, actual utility measurements have been shown to be highly sensitive to the scale employed. For example, Hershey et al. (1982), Hershey and Schoemaker (1983), and others have shown that a linear transformation ofthe interval scale can drastically alter the results which are generated. Thus, the numerical values used on the scale do seem to affect an individual's stated preferences, and we cannot say that awy method of preference revelation is entirely independent ofthe scale of measure. The second point concerns the use of a ratio scale. Stevens (1957) and Stevens and Galanter (1964) have argued that ratio scales are an appropriate means with which to elicit response to stimuli. Given that all methods are in some way scale dependent, what is the correct scale for use in the AHP? Saaty (1980) has proposed that we use a ratio scale between 1 and 9, although as we have discussed, this scale is open to debate. The experiments reported by Saaty (1980) and the experience of many users of the AHP tend to support the view that the 1 to 9 scale captures fairly well the preferences of an individual. However, the scale can be altered to suit an individual's needs. Take, for example, the issue of placing an upper limit on the ratio scale (such as 9). Why not allow for an unbounded scale? Although there are many convincing philosophical arguments to support the view embodied in Axiom 2 that humans cannot fully comprehend the notion of infinity or

infinite preference for an altemative when compared with some other alternative, the
mathematical structure of the AHP can even deal with this situation. Consider the following matrix of pairwise comparisons between two alternatives: 1 I/a a 1

In the next section we show that the scale of relative measurements ofthe alternatives is given by the principal right eigenvector

_J.
l+a'

\_\
\+al'

The limit of this eigenvector as a - oo (unbounded or infinite preference) is (1,0); that is, lexicographic-type preferences. Thus, the mathematics of the AHP is capable of dealing with a ratio scale in the interval [1, oo). The recognition of this fact lays to rest the argument that the 1 to 9 scale causes inconsistencies in judgment to occur because

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PATRICK T. HARKER AND LUIS G. VARGAS

of having to remain in this interval; consistency can be easily enforced by expanding the scale, although the reasons why one may not wish to do this (Saaty 1986) are sufficient to choose Axiom 2. Thus, any bounded ratio scale would be in accordance with the axioms. However, one must choose a particular scale in order to implement the AHP; this choice is made on empirical grounds. Clearly, one scale may be appropriate for one application and may not be appropriate for another. In this situation, a different scale could and should be chosen for each application. For general applications where there is no a priori reason for choosing one scale over another, Saaty (1980) has chosen the scale [1,9] and supports this choice with several experiments which lend evidence as to the appropriateness of the scale. Let us now consider the issue in some detail. The 1 to 9 scale may be able to capture a great deal of information and has proven to be extremely useful due to the fact that the AHP is somewhat scale independent. The AHP, through the use of the eigenvector and normalization procedures, is a highly nonlinear operator on the scale of measure. Thus, a simple linear 1 to 9 scale can easily represent a highly nonlinear cognitive scale when the AHP is used in conjunction vnth this linear scale. Furthermore, the AHP requires an individual to make n{n l)/2 pairwise comparisons when comparing n alternatives, versus the (n - 1) comparisons which would have to be made if cardinal transitivity (or consistency) is enforced. The judgments obtained by using the AHP contain redundant information so that even if any one judgment is forced to be inconsistent due to the 1 to 9 scale, the final weights are not substantially affected. Vargas' (1984) work on the stability of positive reciprocal matrices lends further evidence to the conclusion that any inconsistencies caused by the 1 to 9 scale do not significantly affect the final weights. In order to illustrate that the 1 to 9 scale of measurement does capture perception, consider the distance measurement presented in Saaty (1980, pp. 41-42):
IDistance fiom Philadelphia Cairo Tokyo Chicago San Francisco London Montreal

Cairo 1

Tokyo

Chicago

San Francisco M M 1 M

London M M 1

Montreal VS A

B(VS-A)
1 A 1

B(S-VS)
S

B(E-M) B(S-VS) B{S-VS)

1

where EEqual Distance A/^Moderate Distance SStrong Distance VSVery Strong Distance AAbsolute Distance, and B{E~M), for example, represents Between Equal and Moderate. The 1 to 9 scale, when stated verbally, is given in Table 1 (Saaty 1980, p. 54).
TABLE 1 Pc(A,,Aj) 1 3 5 7 9 Definition Equal Distance Moderate Distance Strong Distance Very Strong Distance Absolute Distance

RATIO SCALE ESTIMATION THEORY TABLE 2 Scale (1) (2) (3) (4) 1-9 1-5 1-15 Equal 1 1 1 1 1 Moderate 3 2 5 9 Strong 5 3 8 25 Very Strong 7 4 11 49

1391

Absolute 9 5 15 81

x^

(5)

V3
TABLE 3 Actual Normalized Distance 0,278 0,361 0,032 0,132 0,177 0,019

City Cairo Tokyo Chicago San Francisco London Montreal

p

(I) 0,255 0,393 0.036 0,123 0,165 0,028 0,979

(2)
0,245 0,326 0,051 0,148 0,180 0,051 0,957

(3) 0,250 0.465 0,024 0,099 0,146 0,016 0,850

(4) 0,244 0,554 0,006 0,072 0,120 0,003 0,495

(5) 0,227 0,282 0,083 0,154 0,180 0,074 0,836

Let us consider the use ofthe following set of alternative scales shown in Table 2. Using the above scales, the estimated distances are shown in Table 3. p is the correlation coefficient between the estimated relative distances and the actual relative distances. In this simple example, the 1 to 9 scale outperforms the two linear and the two nonlinear transformations of this scale. There is grovidng evidence as shown by various experiments and by the use of the AHP in practice that the 1 to 9 scale can accurately portray an individual's intensity of preference. However, it must be pointed out that any ratio scale can be used in this method; the choice of a scale such as the 1 to 9 scale is a result of experimental evidence. The experimentation with various scales of measure is an area in which research must be directed so that a consensus throughout the research community can be reached concerning the scale numerical values. Until this research is completed, however, the 1 to 9 scale has proven to be an acceptable scale and is recommended for use in the AHP. 5. Cardinal Measurement of Preferences: The Eigenvector Approach Given the axioms of 2 and the scale of measure discussed in the previous section, the next task in developing a cardinal measure of preferences involves the synthesis ofthe pairwise comparisons into an overall weighting ofthe attributes. That is, how does one take the information Pc(A,, Aj) for all A,,AjE A, and create a set of weights w, for all A, G Al This question is the subject of this section. The pairwise comparisons Pc(A,, Aj), following the axioms of 2, form a positive reciprocal matrix which we denote by

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PATRICK T. HARKER AND LUIS G. VARGAS

where a,j ^ Pc{^i, Aj). Several alternative methods for synthesizing the information contained in A have been suggested. In addition to Saaty's method (1980), there is the method of least squares (Cogger and Yu 1983; Jensen 1983; McKeekin 1979) which find the vector of weights w = {wi, W2, ..., Wn)^ by minimizing the Euclidian metric 2"^=i (Oy wJWj)^ and the method of logarithmic least squares (De Graan 1980; Fitchner 1983; Williams and Crawford 1980) which minimizes

2 flog ay-log ^ ) .
However, the eigenvector method is the only method which we believe is correct when A is an inconsistent matrix; that is, when A does not satisfy the relation a,jaji, = a,/, for all /, J and k. Mirkin (1979) has proven that the eigenvector is the appropriate method when the matrix is consistent. However, since inconsistency is a fact of life in measuring preferences due to one's inability to (and, in fact, desire not to) dismiss judgments which are not perfectly consistent (see the recent paper by Snyden 1985, for an interesting discussion of the "economic" causes of inconsistencies in judgments), the debate between which procedure is the correct method to use when A is inconsistent is of great importance. In order to show that the eigenvector method is the correct method to use, we begin with an illustrative example. Consider the matrix

A =[ 1 \l/a

1 3 i 1

Any n X n positive matrix can be thought of as a strongly connected, directed graph where the labels on the arcs connecting the n nodes are the elements fly. Figure 1 illustrates the graph for the matrix A. Furthermore, let a = 6 in which case A is consistent. In terms of the graph depicted in Figure 1, consistency is recognized by noting that all cycles from each node have the same intensity, where the intensity of a path is defined as the product of the intensities associated with the arcs of that path. Therefore, the weights of the alternatives are any column of the matrix A, and since a ratio scale is invariant under similarity transformations, we can normalize these weights to unity. Thus, we have {w,, Wi, w^ = (0.6, 0.3, 0.1). There is, however, an alternative interpretation of this simple result. Consider the

RATIO SCALE ESTIMATION THEORY

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length of all paths of length 1 from each node. The intensities associated with each path are given by the matrix A. Now consider paths of length 2. From node one to node one there are the paths (1-1-1) of intensity l,(l-2-l)ofintensity 2(1/2) = l , a n d ( l - 3 - l ) o f intensity (1/6)6 = 1. Thus the intensity of node one as compared with node one taking into account the "second-order" effects of the other alternatives is 1 -I- 1 + 1 = 3. Similarly, the intensity of preference of 1 over 2 taking into account second-order effects is given by the sum ofthe intensities of all paths of length 2, the paths (1-1-2) with intensity 1(2) = 2, (1-3-2) vidth intensity 6(1/3) = 2, and (1-2-2) with intensity 1(2) = 2, giving an overall intensity of 2 + 2 + 2 = 6. By now, the readers familiar with graph theory should have noticed that A corresponds to a type of node-arc incidence matrix which we call an intensity incidence matrix, and that the impact of node / on node 7 on paths of length k is given by the Ath power of A, A'', which is analogous to finding the adjacency of nodes in a graph using paths of length k. For our example we have = /3 6 18\ 1.5 3 \0.5 1 3/ /9 ^'=4.5 \l.5 18 54 9 27 3 9

and so on. Each element a!*' ofA'^ represents the overall intensity of A, over Aj along paths of length k. As k increases, more and more of the total interactions between alternatives are taken into account. Thus, theyth column of ^* represent the overall intensity of preferences along paths of length k for each A, when viewed from node 7; and the normalized column represents the relative importance of each alternative along paths of length k. In the consistent case, each column of ^4* when normalized yields the same relative preferences as one would obtain by normalizing the columns of ^ ' . For^^^ we have 3 3/5 = 0.6 18 9-^ 3 18/30 = 0.6 9/30 = 0.3, 3/30 = 0.1 1.51.5/5 = 0.3, 0.5 0.5/5 = 0.1

and so on. What happens when A is an inconsistent matrix? To illustrate this case, let a = 4 in our example. Then, the paths of length 1 yield different relative intensities, which can be seen from the normalized columns of A. We have 0.517 0.286 0.143 0.600 0.300 0.100 0.500 0.375 0.125

That is, the relative importance of each alternative depends on the node used as reference. Considering the paths of length 2, we include more ofthe interactions. This can be seen from A^ and its normalized columns: 3 75 0.667 (Normalized y^^) 5.333 3 1.167 14 8 3 0.560 0.320 0.120

/0.554 0.561 0.323 0.316 \0.123 0.123

This same line of argument for paths of lengths 3 and 4 yield the following normalized columns:

1394

PATRICK T. HARKBR AND LUIS G, VARGAS /O.5584 /O.f (0.3198 0.2 VO.l .1218 /0.5584 0.3196 \0.1220 0.5581 0.3198 0.1221 0.5584 0.3196 0.1220 0.5588 0.3193 0.1219 O.5584v 0.3196 . 0.1220/

(Normalized ^^)

(Normalized ^4")

Therefore, the normalized path intensities as A; - oo are equivalent to the normalized columns of/4*, and converge to the alternative weights w = (0.558, 0.320, 0.122). If one accepts this intuitive notion that the normalized columns of ^4* are the relative importance of each alternative when "viewed from a particular alternative" then Saaty (1986) has shown the following result.
THEOREM 1. Let A be a positive reciprocal matrix. (i) If A is consistent then the principal eigenvector of A is given by any of its columns. (ii) If A is inconsistent then the principal eigenvector is given by the limit of the normalized intensities of paths of length k.

for all h = 1, 2, . . . , /J. Therefore, this process of considering paths of lengths 1, 2, 3 , . . . , in order to capture all interactions among alternatives is in fact the eigenvector method. The main reason why this controversy over the eigenvector method (EM), the least squares method (LSM), and the logarithmic least squares method (LLSM) has occurred is due t o the issue of rank reversal (Belton and Gear 1983, 1985). Unlike traditional methods of decision analysis which do not deal directly with inconsistent judgments, rank reversal is a possibility in the current situation due to these inconsistencies. In a single matrix A which we have been considering in this section, it seems intuitive from the graph theoretic argument that E M would retain rank ordering in an inconsistent matrix while the other methods may or may not, Saaty a n d Vargas (1984a, b) have addressed this issue at length with the type of graph theoretic argument presented above. The dominance of alternatives along paths of length k contained in A'^ has been shown by Saaty and Vargas (1984a) to be the preferred method of deriving the cardinal ordering of a set of alternatives. T h e eigenvector of Theorem 2 is in fact the relative dominance of an alternative. Before closing this section, the relationship between Axiom 2 (p-Homogeneity) and the synthesis of pairwise comparisons should be stated. Given a scale (e.g., the 1 to 9 scale) homogeneity states that all Pc(Ai, Aj) should be contained in the interval defined by the scale. If this were not the case, the mathematical argument presented in this section would still be valid, but the results would be meaningless. If 9 is "absolute importance" on our scale, what meaning would 10 have a n d hence, what meaning would the resulting weights have? Thus, homogeneity of alternatives is necessary for the weights w, to have meaning in the context of our scale of measure. 6. Preferences in General Network Structures and the Issue of Rank Reversal

While there has been some controversy concerning the eigenvector method, most analysts recognize the validity of this method through the type of argument presented in the last section, and through the numerous successful applications of the method. However, some believe that the notion of hierarchical composition of levels of criteria and alternatives (a) is too simplistic, and that (b) rank reversals can occur (Belton and Gear 1983). In this section we address these issues.

RATIO SCALE ESTIMATION THEORY

1395

Consider a simple hierarchy in which there are three criteria Ci, C2 and C3, and two alternatives Ai and A2 which are compared with respect to the three criteria. Furthermore, let us assume that not only the alternatives influence the criteria but that the criteria also influence the alternatives. Thus, we have what Saaty (1980, Chapter 8) has defined as a system with feedback. This new system is no longer a simple hierarchy, but a complex network of interactions in which the choice of an alternative affects a criterion and the choice of a criterion affects an alternative. Therefore, we no longer have a simplistic system, but a highly complex one, and the criticism voiced in (a) is immediately ill-founded. Returning to our example, let the weights for each alternative with respect to the criteria be as follows:
Criteria wi wy

1 2 3

0.5 0.4 0.8

0.5 0.6 0.2

Also, let the weights obtained by comparing the criteria according to a particular alternative (i.e., the feedback loop ofthe hierarchy) be given by
Alternative 0.3 0.3 0.3 0.5 0.4 0.2

Figure 2 depicts the network associated with this system. The reader somewhat familiar with the AHP should immediately recognize this network as a generalization of a standard hierarchy. What are the overall weights associated with each criterion and each alternative? Let us construct the incidence matrix for this network:
C,

C2

A2

W =

c, CJ
C3 Al A2

0 0 0 0.3 0.3 0 0.3 0.5 0 0 0 0 0.4 0.2 0 0 0.5 0.4 0.8 0 0 0.5 0.6 0.2 0

' contains the "first-order" impacts of each alternative and criterion on all other alternatives and criteria. It is analogous io A^ in the previous section. The third-order impacts which take into account the impacts of all elements along paths of length 3

FIGURE 2

1396

PATRICK T. HARKER AND LUIS G. VARGAS

have the same type of graph-theoretic interpretation as A'' and can be found by computing W^. Continuing the same line of argument as in 5, we have 0 0 0 0.554 0.446 0 0 0 0.554 0.446 0 0 0 0.554 0.446 0.300 0.389 0.311 0 0 0 .300 0 .389 0 .311 0 0

lim

Thus, the overall weights of the criteria are (0.300, 0.389, 0.311) and the composite weights of the alternatives are (0.554, 0.446). The theory behind the use of this "supermatrix" Wean be found in Saaty (1980). where he presents a slightly different exposition of this approach to systems with feedback when he compares H^*+' with the transition probability matrix of a Markov process. There does exist a theory for expanding the AHP beyond simple tree structures, and this theory does allow one to easily model complex systems, such as the assessment of economic input-output tables by Saaty and Vargas (1979). The second problem which has been raised concerning the AHP involves the problem of rank reversals. In a hierarchy, several authors have shown that rank reversals occur even if all judgments are consistent; the following example from Dyer and Wendell (1985) illustrates this point. Consider four alternatives, A^, A^, Ay and A^, which must be ranked according to four criteria, Ci, C2, C3 and C4. Let us assume that performance measures are available according to the four criteria as shown in Table 4. I>yer and Wendell (1985, p. 20) attempt to make their example realistic by assuming that the alternatives are mutually exclusive investment opportunities, each yielding returns for four years which are considered to be the criteria, and each requiring the same initial capital outlay. Let Table 4 be the returns of the alternatives during the four years. Which alternative should be chosen to maximize the return from the investment? If the criteria are assumed to be difference independent (see Dyer and Sarin 1979). the preference ranking is obtained by adding the scores according to the criteria. Note that this difference independence is itself a subjective concept. In the previous example we have
Alternatives A^
Al

Scores 14 20 18 18

Rank 4 1 2 2

A, A,

Dyer and Wendell (1985) proceed to show that, assuming that the criteria are equally important and that hierarchic composition is used to determine the composite score of

TABLE 4 Criteria Alternatives A,

A2 Ay

c,
1

Q 9 1 1 1

C3

c.
3 1 5 5

9 8
4

A,

1 9 4 8

RATIO SCALE ESTIMATION THEORY

1397

the alternatives, if one first ranks the first three alternatives and then all four, rank reversal takes place. Let us consider the case of three alternatives. We have

c,
A}

Ci

Ct

Composite Score 0,320 0,336 0,344 Composite Score 0,264 0,243 0,246 0,246

Rank
3 2 1

1/18 9/18 8/18

9/11 1/11 1/11

I/I4 9/14 4/14

3/9 1/9 5/9

For the four alternatives, we have

c,
.4}

Cz

Ct

Rank
1 4 2 2

A,

1/22 9/22 8/22 4/22

9/12 1/12 1/12 1/12

1/22 9/22 4/22 8/22

3/14 1/14 5/14 5/14

and alternatives Ai and A2 have reversed ranking. The authors conclude that because this simple example cannot be handled by hierarchic composition, the AHP produces arbitrary rankings. In this example, rank reversals are only due to a misuse ofthe theory rather than a faulty axiomatic base, as we shall now illustrate. An important assumption underlying the use ofthe Principle of Hierarchic Composition is that the weights of the criteria are independent from the alternatives considered. If this assumption is violated, then the system with feedback approach must be used. In this case the Principle is violated and we must construct a supermatrix W as follows: Al A2 AJ A4 C, C2 C3 Q

c,
C2 C3

c.
Al A2 A3

RELATIVE WEIGHTS OF CRITERIA ACCORDING TO ALTERNATIVES _ _

r\

A,

RELATIVE WEIGHTS OF ALTERNATIVES ACCORDING TO CRITERIA

(J

Note that in the example, the criteria (time periods) should not have been assumed equally important if hierarchic composition is used, because the returns are not the same under each time period. The question is, what should the weights of the criteria be so that the relative weights of the alternatives coincide with the relative scores obtained under the assumption of difference independence. The answer is given by li \ In the example we have
Ci C2 C3

Ct

Al

A2

A]

At

0
Ct
E

1/14 9/14 1/14 3/14 1/22 9/22 4/22 8/22 3/14 1/14 5/14 5/14
-1 "

9/20 1/20 9/20 3/20

8/18 1/18 4/18 5/18

4/18 4/18 8/18 5/18 and

A,
A2

1/22 9/22 8/22 4/22

9/12 1/12 1/12 1/12

1398

PATRICK T. HARKER AND LUIS G. VARGAS

c, c,
C2

C3

C4

A, 0.3143 0.1714 0.3143 0.200

A2

Ay

A,' 0.3143 0.1714 0.3143 0.200

c ,
A, 0.2000 A2 0.2857 A, 0.2571 A, 0.2571 0.2000 0.2857 0.2571 0.2571

0.3143 0.1714 0.3143 0.200

0.3143 0.1714 0.3143 0.200

0.2000 0.2857 0.2571 0.2571

0.2000 0.2857 0.2571 0.2571

Note that the relative scores for the alternatives are given by
Relative

Alternatives A,
A2

Scores 14 20 18 18

ScoFes 0.2000 0.2857 0.2571 0.2571

A, A,

which coincide with the weights for the alternatives given by This result can be summarized in the following proposition. Let Jibe a finite set of alternatives and let be a finite set of m criteria. Let Oy be the value or score of the / th alternative according to they th criterion measured on an absolute scale. Let the criteria be additive, i.e., the overall score of value ofthe /th alternative is given by the sum ofthe scores of the alternative under all the criteria, 2jli ay. Let ^ be the matrix whose columns are the relative weights ofthe alternatives according to the criteria (i.e., 2".i a,, = 1,7= 1,2- ,m) and let .S be a matrix whose columns are the relative weights ofthe criteria according to the alternatives (i.e., 2;';i bj, = I, i = 1, 2, . . . , ) . Let H^be a matrix defined as follows

where
' ail ai2

2, a,,
^2 ]

2, a,2
a22

2, a,,
"nl

2,a,2
aril

2, a,m
y / ^1 '^tm I nxm

and

,2, a,,

2,a,2

jOtij Ot\2

Zj a2j 0(22

Lj anj ^n2

\ Z j OLxj

l^jOl2j

' Columns may not add to unity because of rounding.

RATIO SCALE ESTIMATION THEORY PROPOSITION.

1399

The relative weights ofthe criteria independent from alternatives are lim im

given by

BiABf = ( 1 ^ , J = 1, 2 , . . . , m]
= (^^^,i= 1,2,...,).

and the relative weights ofthe alternatives with respect to all the criteria are given by

Therefore, one must be very careful and not misuse hierarchic composition and must recognize when general network structures are necessary. Another example of rank reversal is due to Belton and Gear (1983). In their example, three alternatives A, B and C are compared against three criteria Ci, C2 and C3, the judgment matrices being:
C. A B C
Cy

A 1 9 1 A 1 9/8 1/8

B 1/9 1 1/9 B 8/9 1 1/9

C 1 9 I C 8 9 1

w 1/11 9/11 1/11 w 8/11 9/11 l/ll

C2 A B C GOAL

A 1 1/9 1/9

B 9 1 1

C 9 1 1
Cy

w 9/11 l/H l/Il w 1/3 1/3 1/3

c,
1 1 1

c.
1 1 1

A B C

c,
C2 Cy

1 1 1

The overall weighu for A, B and C after applying Saaty's principle of hierarchic composition (which we shall discuss in a moment) are: WA = (1/3X1/11) + (1/3X9/11) + (l/3)(8/18) = 0.45, ^Ks = (1/3X9/11 + 1/11-1-9/18) ff'c = (1/3X1/11 + 1/11 + 1/18) =0.47, =0.08.

Now, Belton and Gear add an alternative D and keep the same judgments for ^ , B and C:

c,
A B C

A I 9 1 9

B
1/9 1 1/9

c
1 9 1 9

D 1/9 1 1/9 1

C, A B C

A 1 1/9 1/9 1/9 D w 8/27 9/27 1/27 9/27

B 9 1 1 1

C 9 1 1 1

D 9 1 1 1

w 9/12 1/12 1/12 1/12

1/20 9/20 1/20 9/20 A 1 9/8 1/8 9/8 B 8/9 1 1/9 1 C 8 9 1 9

c,
A B C D

8/9 1 1/9 1

yielding the rankings

M ^A

= 0.37,

Wg

= 0.29,

wc = 0.06,

and

WD

= 0.29,

reversingrankbetween A and B. However, the new alternative > is a copy of 5 as can be seen by the equality of their columns in the matrices given above. The special case of Axiom 4 discussed in 2 has ruled out the addition of such an alternative because it does not add anything to the choice set. This same type of behavior is exhibited in discrete

1400

PATRICK T. HARKER AND LUIS G. VARGAS

choice modeling, as evidenced by the well-known "red bus-blue bus" example in the transportation literature. In this example a logit model is estimated for the modal split between auto and bus (the red bus) and a 50-50 split is observed. If a blue bus is now added, the same model used, and if it is assumed that the color ofthe bus does not affect choice, then a 5-5-5 split is observed. However, intuition suggests that the split should be 50-25-25. In order to prevent this rank reversal from occurring, nested logit models were created. That is, the copy ofthe bus is removed from the choice set at the auto-bus level and moved to another level ofthe hierarchy. This example serves to illustrate that the deletion of copies and the addition of criteria to differentiate alternatives (the bus color) is essential in both the AHP and in some utihty models. Thus, Behon and Gears counterexample is vacuous when these facts are recognized. On a deeper philosophical level, Saaty and Vargas (1984c) have argued that reversal of rank does make sense. Luce and Raiffa's (1957) famous example of a gentleman choosing salmon over steak at a new restaurant until he hears that they also serve snails and frog legs and then chooses steak, points to the fact that rank reversal is a fact of life. Our definition of a copy in 2 carefully states that the set of criteria must be considered to be a complete set, that is, no new criteria can be added. The explanation typically given for this restaurant patron's seemingly erratic behavior is that upon hearing that the restaurant also has snails and frog legs, he feels that it must be a good place, and thus the steak is most hkely of high quality. That is, a new criterion ofthe quality of the restaurant was added to the set of criteria S. Therefore, new alternatives and the possibility of rank reversal must be dealt with carefully because one can never fully know the set . However, if is believed to be complete, then copies must be deleted because they add nothing to the altemative set. Finally, the Principle of Hierarchic Composition is in fact a special case ofthe general system with feedback. Saaty (1980, Chapter 8) has shown that hierarchic composition is obtained if the general principle of composition of systems with feedback is applied to a hierarchy. That is, hierarchic composition arises naturally out of the general system when this system is defined appropriately. For example, consider the situation depicted in Figure 2 where the weights for the three criteria are given exogeneously; i.e.. these weights are formed independently of the two alternatives. Let us assume that these weights are (Ci, C2, C3) = (0.3, 0.4, 0.3). The supermatrix then becomes: C.
C2 IV= C2

C2

C3 0 0 0 0.8 0.2

A,

A2

0 0 0 A, 0.5 A2 _0.5

0 0 0
0.4 0.6

0.3 0.3 0.4 0.4 0.3 0.3 0 0 0 0 _

1 by and its hmit is given by: " 0 0 0 0.55 0.45 0.45 0 0 0 0.55 0.45 0.45 0 0.3 (3.3 0.4 (3.4 0 0 0.3 (3.3 0.55 0 0 0 _ 0.45 0 0.45 0 0

im

y;f/2k+]

The weights obtained in the supermatrix limit are precisely the weights obtained b; hierarchical composition: = 0.3(0.5) + 0.4(0.4) -I- 0.3(0.8) = 0.55, = 0.3(0.5) + 0.4(0.6) + 0.3(0.2) = 0.45.

RATIO SCALE ESTIMATION THEORY

1401

Therefore, the Principle of Hierarchic Composition follows naturally from a restricted form of a general system with feedback. The critical issues which arise in using the supermatrix technique are: (a) what type of questions must one ask in order to compare criteria with respect to alternatives (the upper right-hand section ofthe supermatrix), and (b) are these questions meaningful? Obviously, decision makers may have some difficulty answering such questions in specific applications, but this is not always the case. Consider the investment example discussed above; the question becomes: for a given investment, in which period did the investment perform better and by how much. Thus for investment A i the matrix of comparisons is:
PERIODS

c, c,
C2 Ci Ct

C2

Ci

G
13 / 3 13 / 1

Eigenvector 1/14 9/14 1/14 3/14

19 / 1

1 9 1

For example, alternative A1 did nine times better in period C2 than in Ci, and thus the comparison of Ci versus C2 is | . Note that the new investment is not a copy or even a near copy of any of the other three alternatives, and thus rank reversal cannot be explained as a violation of Axiom 4. This example is simply a case of violation of the linear hierarchical structure typically associated with the AHP and points to the need for the supermatrix approach in certain instances. In the case of the example by Belton and Gear, the new alternative is a copy of alternative B and thus does not contribute new information to the process. This type of rank reversal is explained by the notion of structural or outer dependence (Saaty 1987).

In the case ofthe investment example, the dependence ofthe criteria on the alternatives
is not only due to the structural dependence of criteria on alternatives (they exist together in the hierarchy and are thus dependent), but is also due to & functional or inner dependence (criteria must be judged with respect to alternatives). However, the second example exhibits pure structural dependence. Note that in both cases an appropriately defined supermatrix will derive the "intuitively" correct weights. If one simply ignores these dependencies, one is assuming the criteria weights are independent of the alternatives and thus the Principle of Hierarchic Composition is valid. However, these dependencies are valid in the modelling of real-life decision problems and one should consider the use of supermatrices; much more work is necessary to clarify and apply this technique and its relationship to structural and functional dependencies. Ignorance or dismissal of these notions of dependence in most classical decision analysis methods reminds one of Davis's (1986, p. 75) quote: "Impossibilities are converted to possibilities by clarifying the structural background, by altering the context, by embedding the context in a wider context," but as he states later: "Why does one want to do it?" 7. Conclusion The major criticisms which have been launched at the AHP are, in our opinion, not ''alid. The AHP is based upon a firm theoretical foundation and, as examples in the literature and in the day-to-day operations of various govemment agencies, corporalions and consulting firms illustrate, the AHP is a viable, usable decision-making tool. However, this does not mean that the AHP is the method, just as linear programming cannot solve all OR/MS problems.

1402

PATRICK T. HARKER AND LUIS G. VARGAS

One should also not view the AHP as a subset of or perturbation to the traditional methods of dedsion analysis such as MAUT. The main controversy in the dedsion analysis community has arisen by not recognizing that the AHP is based upon an entirely different set of axioms. For example, the fact that the AHP can exhibit dependence of irrelevant alternatives (rank reversal) has ruled out this method's use by many in the OR/MS community. However, Axiom 4 excludes this possibility in the AHP if the method is carefuUy employed; i.e., independence of alternatives is never assumed or viewed in the AHP as necessary or even highly desirable. One may say that this hne of argument is invalid since it contradicts the axioms of MAUT. However, MAUT contradicts a basic tenet ofthe AHP which is equally desirable; namely, the fact that people are inconsistent and that their inconsistency should be dealt with in a formal rather than in an ad hoc manner. Therefore, one must not judge the AHP according to the axiom of MAUT, but rather should view the two methods as different and possibly complementary. Finally, several interesting areas of research exist in the AHP: clarification of the supermatrix technique and structural/functional dependencies, better exploitation of the inconsistency capabilities of the AHP in MAUT, SMART and other decision analysis methods, and the development of effident implementations of this method. In sum, the AHP is an area in which many interesting research problems can lead to many useful extensions. The AHP should not be viewed as a final product, but as a lively area for intellectual progress.^
^ This work was partially funded by the U.S. Army and by thefirstauthor's NSF grant ECE-8552773; their support is gratefully acknowledged. Also, the comments of an anonymous referee and the Associate Editor arc warmly appreciated.

References
BELTON, V., "A Comparison ofthe Analytic Hierarchy Process and a Simple Multi-Attribute Value Function," European J. Oper. Res., 26 (1986), 7-21. AND T. GEAR, "On a Short-coming of Saaty's Method of Analytic Hierarchies," Omega, 11,3 (1984). 228-230. AND , "The Legitimacy of Rank ReversalA Comment," Omega, 13, 3 (1985). 143-144. COGGER, K. O. AND P. L. Yu, "Eigen Weight Vectors and Least Distance Approximation for Revealed Preference in Pairwise Weight Ratios," School of Business, University of Kansas, 1983. COOK, T., P. FALCHI AND R. MARIANO, "An Urban Allocation Model Combining Time Series and Analytic Hierarchy Methods," Management Sci., 30, 2 (1984), 198-208. DAVIS, P. J., "When Mathematics Says No," Math. Magazine, 59 (1986), 67-76. D E GRAAN, J. G., "Extensions ofthe Multiple Criteria Analysis Method of T. L. Saaty," paper presented ai EURO IV, Cambridge, July 22-25, 1980. DYER, J. S. AND R. SARIN, "Measurable Multiattribute Value Functions," Oper. Res., 27,4 (1979), 810-822 AND R. E. WENDELL, "A Critique of the Analytic Hierarchy Process," Working Paper 84/85-4-24. Department of Management, The University of Texas at Austin, 1985. FICHTNER, J., "Some Thoughts about the Mathematics of the Analytic Hierarchy Process," Horschule der Bundeswehr Munchen, September 1983. GOLDEN, B., A. HERNER AND P. POWER, "Dedsion Insight Systems for Microcomputers: A Critical Evalua tion," Computers and Oper. Res., 13 (1986), 287-300. HAMXlAnsiEN, R. P., "Computer Assisted Energy Policy Analysis in the Parliament of Finland," paP^ presented at the Fifth Intemational Conference on Mathematical Modelling, Berkeley, CA, Jul' 29-31, 1985. HARKER, P. T., "The Use of Expert Judgments in Predicting Interregional Migration Patterns: An Analyt' Hierarchy Approach," Geographical Analysis, 18, 1 (1986), 62-80. HERSHEY, J. C , H. C. KLINREUTHER AND P. J. H. SCHOEMAKER, "Sources of Bias in Assessment Procedure for Utility Functions," Management Sci., 28, 8 (1982), 936-939. AND P. J. H. SCHOEMAKER, "Probability versus Certainty Equivalence Methods in Utility Measuff ment: Aie They EquivalentT' working paper 83-01-01, Department of Dedsion Sdences, The Wl>^' ton School, University of Pennsylvania, 1983.

RATIO SCALE ESTIMATION THEORY

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