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On the Choice of Baselines in Multiattribute Portfolio Analysis: A Cautionary Note

Publication ,  Journal Article
Clemen, RT; Smith, JE
Published in: Decision Analysis
December 2009
Published version (DOI) Open Access Copy (Duke) Publisher Link

In multiattribute portfolio optimization, a decision maker must evaluate a number of projects on multiple dimensions and then select the set of projects that optimizes the portfolio's overall value. In this note, we discuss the importance of establishing an appropriate baseline score for not doing a project in multiattribute portfolio analysis. We believe that practitioners often implicitly assume that not doing a project results in the worst possible score on all attributes. We argue that this assumption is often inappropriate and may lead to incorrect recommendations.

Duke Scholars

Robert T. Clemen
Author Robert T. Clemen Fuqua School of Business

Published In

Decision Analysis

DOI

10.1287/deca.1090.0158

EISSN

1545-8504

ISSN

1545-8490

Publication Date

December 2009

Volume

6

Issue

4

Start / End Page

256 / 262

Publisher

Institute for Operations Research and the Management Sciences (INFORMS)

Related Subject Headings

  • 5204 Cognitive and computational psychology
  • 5003 Philosophy
  • 3507 Strategy, management and organisational behaviour
  • 1505 Marketing
  • 1503 Business and Management
  • 0914 Resources Engineering and Extractive Metallurgy
 

Citation

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ICMJE
MLA
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Clemen, R. T., & Smith, J. E. (2009). On the Choice of Baselines in Multiattribute Portfolio Analysis: A Cautionary Note. Decision Analysis, 6(4), 256–262. https://doi.org/10.1287/deca.1090.0158
Clemen, Robert T., and James E. Smith. “On the Choice of Baselines in Multiattribute Portfolio Analysis: A Cautionary Note.” Decision Analysis 6, no. 4 (December 2009): 256–62. https://doi.org/10.1287/deca.1090.0158.
Clemen RT, Smith JE. On the Choice of Baselines in Multiattribute Portfolio Analysis: A Cautionary Note. Decision Analysis. 2009 Dec;6(4):256–62.
Clemen, Robert T., and James E. Smith. “On the Choice of Baselines in Multiattribute Portfolio Analysis: A Cautionary Note.” Decision Analysis, vol. 6, no. 4, Institute for Operations Research and the Management Sciences (INFORMS), Dec. 2009, pp. 256–62. Crossref, doi:10.1287/deca.1090.0158.
Clemen RT, Smith JE. On the Choice of Baselines in Multiattribute Portfolio Analysis: A Cautionary Note. Decision Analysis. Institute for Operations Research and the Management Sciences (INFORMS); 2009 Dec;6(4):256–262.

Published In

Decision Analysis

DOI

10.1287/deca.1090.0158

EISSN

1545-8504

ISSN

1545-8490

Publication Date

December 2009

Volume

6

Issue

4

Start / End Page

256 / 262

Publisher

Institute for Operations Research and the Management Sciences (INFORMS)

Related Subject Headings

  • 5204 Cognitive and computational psychology
  • 5003 Philosophy
  • 3507 Strategy, management and organisational behaviour
  • 1505 Marketing
  • 1503 Business and Management
  • 0914 Resources Engineering and Extractive Metallurgy