Professor of Decision Sciences
In many situations, performance on several attributes is important. Moreover, a decision maker's utility may depend not on the absolute level of performance on each attribute, but rather on whether that level of performance meets a target, in which case the decision maker is said to be target oriented.For example, typical attributes in new product development include cost, quality, and features, and the corresponding targets might be the best performance on these attributes by competing products. Targets and performance levels are typically uncertain and are often dependent.The authors develop a model that allows for uncertain dependent targets and uncertain dependent performance levels, and they study implications for decision making in this general multiattribute target-oriented setting.The authors consider the impact on expected utility of modifying key characteristics of performance (or target) distributions: location, spread, and degree of dependence.In particular, the authors show that explicit consideration of dependence is important, and they establish when increasing or decreasing dependence is beneficial. The authors illustrate the results numerically with a normal model, and they discuss some extensions and implications.