Decision making problems: A comparison of AHP, Secretary Problem and other decision making techniques

Abstract

In my final thesis I will introduce you the decision making theories and what is behind the act of taking a decision. As we know, decision-making problems constitute a vast field that includes: cognitive and personal biases, decision processes, and information about states of nature. All of them influence in a certain way the method used to take a decision or choose one alternative in respect to another one.

Analysed that, I will explain theoretically what the Analytic Hierarchy Process consists of, how it works, and when the process is considered to be valid or invalid: the inconsistency index and the sensitivity analysis. Then, in order to better understand what is so far described, a numerical example is carried out.

Another chapter will focus on a case study, regarding the Port of Trieste, where the AHP process was properly used to decide what is the best alternative to choose among the existing four. Indeed, this practical example talks about the decision of investing for the improvement of the Port of Trieste, according to the European Union TEN-T policy.

Finally I will conclude with the description of another decision making technique, the so called Secretary Problem: his historical background, the standard formulation and other alternative solutions. What I want to stress is, in fact, the comparison between these two processes: the above-mentioned AHP and the Secretary Problem. Other models will also be explained, such as: the Cayley’s problem, the Kepler’s problem and the game of Googol.