How To Make A Decision: The Analytic Hierarchy Process

by

Thomas L. Saaty
322 Mervis Hall
University of Pittsburgh
Pittsburgh, PA 15260

Policy makers at all levels of decision making in organizations use multiple criteria to
analyze their complex problems. Multicriteria thinking is used formally to facilitate their
decision making. Through trade-offs it clarifies the advantages and disadvantages of policy
options under circumstances of risk and uncertainty. It is also a tool vital to forming corporate
strategies needed for effective competition.
Nearly all of us, in one way or another, have been brought up to believe that clear-
headed logical thinking is our only sure way to face and solve problems. We also believe that
our feelings and our judgments must be subjected to the acid test of deductive thinking. But
experience suggests that deductive thinking is not natural. Indeed, we have to practice, and for a
long time, before we can do it well. Since complex problems usually have many related factors,
traditional logical thinking leads to sequences of ideas that are so tangled that their
interconnections are not readily discerned.
The lack of a coherent procedure to make decisions is especially troublesome when our
intuition alone cannot help us to determine which of several options is the most desirable, or the
least objectionable, and neither logic nor intuition are of help. Therefore, we need a way to
determine which objective outweighs another, both in the near and long terms. Since we are
concerned with real- life problems we must recognize the necessity for trade-offs to best serve the
common interest. Therefore, this process should also allow for consensus building and
compromise.
Individual knowledge and experience are inadequate in making decisions concerning the
welfare and quality of life for a group. Participation and debate are needed both among
individuals and between the groups affected. Here two aspects of group decision making have to
be considered. The first is a rather minor complication, namely, the discussion and exchange
within the group to reach some kind of consensus on the given problem. The second is of much
greater difficulty. The holistic nature of the given problem necessitates that it be divided into
smaller subject- matter areas within which different groups of experts determine how each area
affects the total problem. A large and complex problem can rarely be decomposed simply into a
number of smaller problems whose solutions can be combined into an overall answer. If this
process is successful, one can then reconstruct the initial question and review the proposed
solutions. A last and often crucial disadvantage of many traditional decision- making methods is
that they require specialized expertise to design the appropriate structure and then to embed the
decision- making process in it.
A decision- making approach should have the following characteristics:
be simple in construct,
be adaptable to both groups and individuals,
be natural to our intuition and general thinking,
encourage compromise and consensus building, and
not require inordinate specialization to master and communicate.
In addition, the details of the processes leading up to the decision- making process should be easy
to review.
At the core of the problems that our method addresses is the need to assess the benefits,
the costs, and the risks of the proposed solutions. We must answer such questions as the
following: Which consequences weigh more heavily than others? Which aims are more
important than others? What is likely to take place? What should we plan for and how do we
bring it about? These and other questions demand a multicriteria logic. It has been
demonstrated over and over by practitioners who use the theory discussed in this paper, that
multicriteria logic gives different and often better answers to these questions than ordinary logic
and does it efficiently.
To make a decision one needs various kinds of knowledge, information, and technical
data. These concern
details about the problem for which a decision is needed,
the people or actors involved,
their objectives and policies,
the influences affecting the outcomes, and
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 the time horizons, scenarios, and constraints.
The set of potential outcomes or alternatives from which to choose are the essence of
decision making. In laying out the framework for making a decision, one needs to sort the
elements into groupings or clusters that have similar influences or effects. One must also arrange
them in some rational order to trace the outcome of these influences. Briefly, we see decision
making as a process that involves the following steps:
(1) Structure a problem with a model that shows the problem's key elements and their
relationships.
(2) Elicit judgments that reflect knowledge, feelings, or emotions.
(3) Represent those judgments with meaningful numbers.
(4) Use these numbers to calculate the priorities of the elements of the hierarchy.
(5) Synthesize these results to determine an overall outcome.
(6) Analyze sensitivity to changes in judgment.
The decision- making process described in this paper meets these criteria. I call it the
analytic hierarchy process (AHP). The AHP is about breaking a problem down and then
aggregating the solutions of all the subproblems into a conclusion. It facilitates decision making
by organizing perceptions, feelings, judgments, and memories into a framework that exhibits the
forces that influence a decision. In the simple and most common case, the forces are arranged
from the more general and less controllable to the more specific and controllable. The AHP is
based on the innate human ability to make sound judgments about small problems. It has been
applied in a variety of decisions and planning projects in nearly 20 countries.
Here rationality is
Focusing on the goal of solving the problem;
Knowing enough about a problem to develop a complete structure of relations and influences;
Having enough knowledge and experience and access to the knowledge and experience of
others to assess the priority of influence and dominance (importance, preference, or likelihood
to the goal as appropriate) among the relations in the structure;
Allowing for differences in opinion with an ability to develop a best compromise.

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How to Structure a Hierarchy
Perhaps the most creative part of decision making that has a significant effect on the
outcome is modeling the problem. In the AHP, a problem is structured as a hierarchy. This is
then followed by a process of prioritization, which we describe in detail later. Prioritization
involves eliciting judgments in response to questions about the dominance of one element over
another when compared with respect to a property. The basic principle to follow in creating this
structure is a lways to see if one can answer the following question: Can I compare the elements
on a lower level using some or all of the elements on the next higher level as criteria or attributes
of the lower level elements?
A useful way to proceed in structuring a decision is to come down from the goal as far as
one can by decomposing it into the most general and most easily controlled factors. One can
then go up from the alternatives beginning with the simplest subcriteria that they must satisfy
and aggregating the subcriteria into generic higher level criteria until the levels of the two
processes are linked in such a way as to make comparison possible.
Here are some suggestions for an elaborate design of a hierarchy: (1) Identify the overall
goal. What are yo u trying to accomplish? What is the main question? (2) Identify the subgoals
of the overall goal. If relevant, identify time horizons that affect the decision. (3) Identify
criteria that must be satisfied to fulfill the subgoals of the overall goal. (4) Identify subcriteria
under each criterion. Note that criteria or subcriteria may be specified in terms of ranges of
values of parameters or in terms of verbal intensities such as high, medium, low. (5) Identify the
actors involved. (6) Identify the actors' goals. (7) Identify the actors' policies. (8) Identify
options or outcomes. (9) For yes-no decisions, take the most preferred outcome and compare the
benefits and costs of making the decision with those of not making it. (10) Do a benefit/cost
analysis using marginal values. Because we are dealing with dominance hierarchies, ask which
alternative yields the greatest benefit; for costs, which alternative costs the most, and for risks,
which alternative is more risky.

The Hospice Problem

Westmoreland County Hospital in Western Pennsylvania, like hospitals in many other
counties around the nation, has been concerned with the costs of the facilities and manpower

4
involved in taking care of terminally ill patients. Normally these patients do not need as much
medical attention as do other patients. Those who best utilize the limited resources in a hospital
are patients who require the medical attention of its specialists and advanced technology
equipment whose utilization depends on the demand of patients admitted into the hospital.
The terminally ill need medical attention only episodically. Most of the time such patients need
psychological support. Such support is best given by the patient's family, whose members are
able to supply the love and care the patients most need. For the mental health of the patient,
home therapy is a benefit. From the medical standpoint, especially during a crisis, the hospital
provides a greater benefit. Most patients need the help of medical professionals only during a
crisis. Some will also need equipment and surgery. The planning association of the hospital
wanted to develop alternatives and to choose the best one considering various criteria from the
standpoint of the patient, the hospital, the community, and society at large. In this problem, we
need to consider the costs and benefits of the decision. Cost includes economic costs and all
sorts of intangibles, such as inconvenience and pain. Such disbenefits are not directly related to
benefits as their mathematical inverses, because patients infinitely prefer the benefits of good
health to these intangible disbenefits. To study the problem, one needs to deal with benefits and
with costs separately.

Approaching the Problem

I met with representatives of the planning association for several hours to decide on the
best alternative. To make a decision by considering benefits and costs, one must first answer the
question: In this problem, do the benefits justify the costs? If they do, then either the benefits
are so much more important than the costs that the decision is based simply on benefits, or the
two are so close in value that both the benefits and the costs should be considered. Then we use
two hierarchies for the purpose and make the choice by forming ratios of the priorities of the
alternatives (benefits bi/costs ci ) from them. One asks which is most beneficial in the benefits
hierarchy (Figure 1) and which is most costly in the costs hierarchy (Figure 2). If the benefits do
not justify the costs, the costs alone determine the best alternative that which is the least
costly. In this example, we decided that both benefits and costs had to be considered in separate
hierarchies. In a risk problem, a third hierarchy is used to determine the most desired alternative

5
with respect to all three: benefits, costs, and risks. In this problem, we assumed risk to be the
same for all contingencies. Whereas for most decisions one uses only a single hierarchy, we
constructed two hierarchies for the hospice problem, one for benefits or gains (which model of
hospice care yields the greater benefit) and one for costs or pains (which model costs more).
The planning association thought the concepts of benefits and costs were too general to
enable it to make a decision. Thus, the planners and I further subdivided each (benefits and
costs) into detailed subcriteria to enable the group to develop alternatives and to evaluate the
finer distinctions the members perceived between the three alternatives. The alternatives were to
care for terminally ill patients at the hospital, at home, or partly at the hospital and partly at
home.
For each of the two hierarchies, benefits and costs, the goal clearly had to be choosing the
best hospice. We placed this goal at the top of each hierarchy. Then the group discussed and
identified overall criteria for each hierarchy; these criteria need not be the same for the benefits
as for the costs.
The two hierarchies are fairly clear and straightforward in their description. They
descend from the more general criteria in the second level to secondary subcriteria in the third
level and then to tertiary subcriteria in the fourth level on to the alternatives at the bottom or fifth
level.
At the general criteria level, each of the hierarchies, benefits or costs, involved three
major interests. The decision should benefit the recipient, the institution, and society as a whole,
and their relative importance is the prime determinant as to which outcome is more likely to be
preferred. We located these three elements on the second level of the benefits hierarchy. As the
decision would benefit each party differently and the importance of the benefits to each recipient
affects the outcome, the group thought that it was important to specify the types of benefit for the
recipient and the institution. Recipients want physical, psycho-social and economic benefits,
while the institution wants only psychosocial and economic benefits. We located these benefits
in the third level of the hierarchy. Each of these in turn needed further decomposition into
specific items in terms of which the decision alternatives could be evaluated. For example, while
the recipient measures economic benefits in terms of reduced costs and improved productivity,
the institution needed the more specific measurements of reduced length of stay, better utilization

9
of resources, and increased financial support from the community. There was no reason to
decompose the societal benefits into a third level subcriteria, hence societal benefits connects
directly to the fourth level. The group considered three models for the decision alternatives, and
located them on the bottom or fifth level of the hierarchy: In Model 1, the hospital provided full
care to the patients; In Model 2, the family cares for the patient at home, and the hospital
provides only emergency treatment (no nurses go to the house); and in Model 3, the hospital and
the home share patient care (with visiting nurses going to the home).
In the costs hierarchy there were also three major interests in the second level that would
incur costs or pains: community, institution, and society. In this decision the costs incurred by
the patient were not included as a separate factor. Patient and family could be thought o f as part
of the community. We thought decomposition was necessary only for institutional costs. We
included five such costs in the third level: capital costs, operating costs, education costs, bad debt
costs, and recruitment costs. Educational costs apply to educating the community and training
the staff. Recruitment costs apply to staff and volunteers. Since both the costs hierarchy and the
benefits hierarchy concern the same decision, they both have the same alternatives in their
bottom levels, even though the costs hierarchy has fewer levels.

Judgments and Comparisons

A judgment or comparison is the numerical representation of a relationship between two
elements that share a common parent. The set of all such judgments can be represented in a
square matrix in which the set of elements is compared with itself. Each judgment represents the
dominance of an element in the column on the left over an element in the row on top. It reflects
the answers to two questions: which of the two elements is more important with respect to a
higher level criterion, and how strongly, using the 19 scale shown in Table 1 for the element
on the left over the element at the top of the matrix. If the element on the left is less important
than that on the top of the matrix, we enter the reciprocal value in the corresponding position in
the matrix. It is important to note that the lesser element is always used as the unit and the
greater one is estimated as a multiple of that unit. From all the paired comparisons we calculate
the priorities and exhibit them on the right of the matrix. For a set of n elements in a matrix one
needs n(n-1)/2 comparisons because there are n 1's on the diagonal for comparing elements with

10
themselves and of the remaining judgments, half are reciprocals. Thus we have (n2 -n)/2
judgments. In some problems one may elicit only the minimum of n-1 judgments.

Intensity Definition Explanation

of
Importanc
e
1 Equal Importance Two activities contribute equally to the
objective
3 Moderate importance Experience and judgment slightly favor one
activity over another
5 Strong importance Experience and judgment strongly favor one
activity over another
7 Very strong or demonstrated An activity is favored very strongly over
importance another; its dominance demonstrated in
practice
9 Extreme importance The evidence favoring one activity over
another is of the highest possible order of
affirmation
2,4,6,8 For compromise between the Sometimes one needs to interpolate a
above values compromise judgment nume rically because
there is no good word to describe it.
Reciprocal If activity i has one of the above A comparison mandated by choos ing the
s of above nonzero numbers assigned to it smaller element as the unit to estimate the
when compared with activity j, larger one as a multiple of that unit.
then j has the reciprocal value
when compared with i
Rationals Ratios arising from the scale If consistency were to be forced by obtaining
n numerical values to span the matrix
1.1-1.9 For tied activities When elements are close and nearly
indistinguishable; moderate is 1.3 and extreme
is 1.9.

Table 1 : The Fundamental Scale. A scale of absolute numbers used to assign numerical values
to judgments made by comparing two elements with the smaller element used as the unit and the
larger one assigned a value from this scale as a multiple of that unit.
As usual with the AHP, in both the cost and the benefits models, we compared the criteria
and subcriteria according to their relative importance with respect to the parent element in the

11
adjacent upper level. For example, in the first matrix of comparisons of the three benefits criteria
with respect to the goal of choosing the best hospice alternative, recipient benefits are
moderately more important than institutional be nefits and are assigned the absolute number 3 in
the (1,2) or first-row second -column position. Three signifies three times more. The reciprocal
value is automatically entered in the (2,1) position, where institutional benefits on the left are
compared with recipient benefits at the top. Similarly a 5, corresponding to strong dominance or
importance, is assigned to recipient benefits over social benefits in the (1,3) position, and a 3,
corresponding to moderate dominance, is assigned to institutional benefits over social benefits in
the (2,3) position with corresponding reciprocals in the transpose positions of the matrix.

Choosing Best Hospice Recipient Benefits Institutional Benefits Social Benefits Priorities

Recipient Benefits 1 3 5 .64

Institutional Benefits 1/3 1 3 .26
Societal Benefits 1/5 1/3 1 .11

C.R. = .033

Table 2: The entries in this matrix respond to the question, Which criterion is more important
with respect to choosing the best hospice alternative and how strongly?

Judgments in a matrix may not be consistent. In eliciting judgments, one makes

redundant comparisons to improve the validity of the answer, given that respondents may be
uncertain or may make poor judgments in comparing some of the elements. Redundancy gives
rise to multiple comparisons of an element with other elements and hence to numerical
inconsistencies. For example, where we compare recipient benefits with institutional benefits
and with societal benefits, we have the respective judgments 3 and 5. Now if x = 3y and x = 5z
then 3y = 5z or y = 5/3 z. If the judges were consistent, institutional benefits would be assigned
the value 5/3 instead of the 3 given in the matrix. Thus the judgments are inconsistent. In fact,
we are not sure which judgments are more accurate and which are the cause of the inconsistency.
Inconsistency is inherent in the judgment process. Inconsistency may be considered a tolerable
error in measurement only when it is of a lower order of magnitude (10 percent) than the actual
measurement itself; otherwise the inconsistency would bias the result by a sizable error
comparable to or exceeding the actual measurement itself.

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 When the judgments are inconsistent, the decision maker may not know where the
greatest inconsistency is. The AHP can show one by one in sequential order which judgments
are the most inconsistent, and that suggests the value that best improves consistency. However,
this recommendation may not necessarily lead to a more accurate set of priorities that correspond
to some underlying preference of the decision makers. Greater consistency does not imply
greater accuracy and one should go about improving consistency (if one can given the available
knowledge) by making slight changes compatible with one's understanding. If one cannot reach
an acceptable level of consistency, one should gather more information or reexamine the
framework of the hierarchy.
Under each matrix I have indicated a consistency ratio (CR) comparing the inconsistency
of the set of judgments in that matrix with what it would be if the judgments and the
corresponding reciprocals were taken at random from the scale. For a 3-by-3 matrix this ratio
should be about five percent, for a 4-by-4 about eight percent, and for larger matrices, about 10
percent.
Priorities are numerical ranks measured on a ratio scale. A ratio scale is a set of positive
numbers whose ratios remain the same if all the numbers are multiplied by an arbitrary positive
number. An example is the scale used to measure weight. The ratio of these weights is the same
in pounds and in kilograms. Here one scale is just a constant multiple of the other. The object of
evaluation is to elicit judgments concerning relative importance of the elements of the hierarchy
to create scales of prior ity of influence.
Because the benefits priorities of the alternatives at the bottom level belong to a ratio
scale and their costs priorities also belong to a ratio scale, and since the product or quotient (but
not the sum or the difference) of two ratio scales is also a ratio scale, to derive the answer we
divide the benefits priority of each alternative by its costs priority. We then choose the
alternative with the largest of these ratios. It is also possible to allocate a resource
proportionately amo ng the alternatives.
I will explain how priorities are developed from judgments and how they are synthesized
down the hierarchy by a process of weighting and adding to go from local priorities derived from
judgments with respect to a single criterion to global priorities derived from multiplication by the
priority of the criterion and overall priorities derived by adding the global priorities of the same

13
element. The local priorities are listed on the right of each matrix. If the judgments are perfectly
consistent, and hence CR = 0, we obtain the local priorities by adding the values in each row and
dividing by the sum of all the judgments, or simply by normalizing the judgments in any column,
by dividing each entry by the sum of the entries in that column. If the judgments are inconsistent
but have a tolerable level of inconsistency, we obtain the priorities by raising the matrix to large
powers, which is known to take into consideration all intransitivities between the elements, such
as those I showed above between x, y, and z [Saaty 1994]. Again, we obtain the priorities from
this matrix by adding the judgment values in each row and dividing by the sum of all the
judgments. To summarize, the global priorities at the level immediately under the goal are equal
to the local priorities because the priority of the goal is equal to one. The global priorities at the
next level are obtained by weighting the local priorities of this level by the global priority at the
level immediately above and so on. The overall priorities of the alternatives are obtained by
weighting the local priorities by the global priorities of all the parent criteria or subcriteria in
terms of which they are compared and then adding. (If an element in a set is not comparable
with the others on some property and should be left out, the local priorities can be augmented by
adding a zero in the appropriate position.)
The process is repeated in all the matrices by asking the appropriate dominance or
importance question. For example, fo r the matrix comparing the subcriteria of the parent
criterion institutional benefits (Table 3), psycho-social benefits are regarded as very strongly
more important than economic benefits, and 7 is entered in the (1,2) position and 1/7 in the (2,1)
position.

Institutional benefits Psycho-social Economic Priorities

Psycho-social 1 7 .875
Economic 1/7 1 .125

C.R. = .000

Table 3: The entries in this matrix respond to the question, Which subcriterion yields the greater
benefit with respect to institutional benefits and how strongly?

In comparing the three models for patient care, we asked members of the planning
association which model they preferred with respect to each of the covering or parent secondary

14
criterion in level 3 or with respect to the tertiary criteria in level 4. For example, for the
subcriterion direct care (located on the left- most branch in the benefits hierarchy), we obtained a
matrix of paired comparisons (Table 4) in which Model 1 is preferred over Models 2 and 3 by 5
and 3 respectively and Model 3 is preferred by 3 over Model 2. The group first made all the
comparisons using semantic terms for the fundamental scale and then translated them to the
corresponding numbers.

Direct care of patient Model I Model II Model III Priorities

Model I - Unit/Team 1 5 3 .64

Model II - Mixed/Home Care 1/5 1 1/3 .10
Model III - Case Management 1/3 3 1 .26

C.R. = .033
Table 4: The entries in this matrix respond to the question, Which model yields the greater
benefit with respect to direct care of patient and how strongly?

For the costs hierarchy, I again illustrate with three matrices. First the group compared
the three major cost criteria and provided judgments in response to the question: which criterion
is a more important determinant of the cost of a hospice model? Table 5 shows the judgments
obtained.

Choosing best hospice (costs) Community Institutional Societal Priorities

Community Costs 1 1/5 1 .14

Institutional Costs 5 1 5 .71
Societal Costs 1 1/5 1 .14

C.R. = .000

Table 5: The entries in this matrix respond to the question, Which criterion is a greater
determinant of cost with respect to the care method and how strongly?

The group then compared the subcriteria under institutional costs and obtained the
importance matrix shown in Table 6.

Institutional costs Capital Operating Education Bad Debt Recruitment Priorities

Capital 1 1/7 1/4 1/7 1 .05

Operating 7 1 9 4 5 .57
Education 4 1/9 1 1/2 1 .10
Bad Debt 7 1/4 2 1 3 .21
Recruitment 1 1/5 1 1/3 1 .07

C.R. = .08

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Table 6: The entries in this matrix respond to the question, Which criterion incurs greater
institutional costs and how strongly?

Finally we compared the three models to find out which incurs the highest cost for each
criterion or subcriterion. Table 7 shows the results of comparing them with respect to the costs
of recruiting staff.

Institutional costs for recruiting staff Model I Model II Model III Priorities

Model I - Unit/Team 1 4 4 .66

Model II - Mixed/Home Care 1/4 1 1 .17
Model III - Case Management 1/4 1 1 .17

C.R. = .000
Table 7: The entries in this matrix respond to the question, Which model incurs greater cost with
respect to institutional costs for recruiting staff and how strongly?

As shown in Table 8, we divided the benefits priorities by the costs priorities for each alternative
to obtain the best alternative, model 3, the one with the largest value for the ratio.
Table 8 shows two ways or modes of synthesizing the local priorities of the alternatives
using the global priorities of their parent criteria: The distributive mode and the ideal mode. In
the distributive mode, the weights of the alternatives sum to one. It is used when there is
dependence among the alternatives and a unit priority is distributed among them. The ideal
mode is used to obtain the single best alternative regardless of what other alternatives there are.
In the ideal mode, the local priorities of the alternatives are divided by the largest value among
them. This is done for each criterion; for each criterion one alternative becomes an ideal with
value one. In both modes, the local priorities are weighted by the global priorities of the parent
criteria and synthesized and the benefit-to-cost ratios formed. In this case, both modes lead to
the same outcome for hospice, which is model 3. As we shall see below, we need both modes to
deal with the effect of adding (or deleting) alternatives on an already ranked set.
Model 3 has the largest ratio scale values of benefits to costs in both the distributive and
ideal modes, and the hospital selected it for treating terminal patients. This need not always be
the case. In this case, there is dependence of the personnel resources allocated to the three
models because some of these resources would be shifted based on the decision. Therefore the
distributive mode is the appropriate method of synthesis. If the alternatives were sufficiently
distinct with no dependence in their definition, the ideal mode would be the way to synthesize.

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 Distributive Mode Ideal Mode

Benefits Priorities Model 1 Model 2 Model 3 Model 1 Model 2 Model 3

Direct Care of Patient .02 0.64 0.10 0.26 1.000 0.156 0.406
Palliative Care .14 0.64 0.10 0.26 1.000 0.156 0.406
Volunteer Support .02 0.09 0.17 0.74 0.122 0.230 1.000
Networking in Families .06 0.46 0.22 0.32 1.000 0.478 0.696
Relief of Post Death Stress .12 0.30 0.08 0.62 0.484 0.129 1.000
Emotional Support of Family and Patient .21 0.30 0.08 0.62 0.484 0.129 1.000
Alleviation of Guilt .03 0.30 0.08 0.62 0.484 0.129 1.000
Reduced Economic Costs for Patient .01 0.12 0.65 0.23 0.185 1.000 0.354
Improved Productivity .03 0.12 0.27 0.61 0.197 0.443 1.000
Publicity and Public Relations .19 0.63 0.08 0.29 1.000 0.127 0.460
Volunteer Recruitment .03 0.64 0.10 0.26 1.000 0.156 0.406
Professional Recruitment and Support .06 0.65 0.23 0.12 1.000 0.354 0.185
Reduced Length of Stay .006 0.26 0.10 0.64 0.406 0.406 1.000
Better Utilization of Resources .023 0.09 0.22 0.69 0.130 0.130 1.000
Increased Monetary Support .001 0.73 0.08 0.19 1.000 1.000 0.260
Death as a Social Issue .02 0.20 0.20 0.60 0.333 0.333 1.000
Rehumanization of Institutions .08 0.24 0.14 0.62 0.387 0.226 1.000

Synthesis 0.428 0.121 0.451 0.424 0.123 0.453

Costs

Community Costs .14 0.33 0.33 0.33 1.000 1.000 1.000

Institutional Capital Costs .03 0.76 0.09 0.15 1.000 0.118 0.197
Institutional Operating Costs .40 0.73 0.08 0.19 1.000 0.110 0.260
Institutional Costs for Educating the Community .01 0.65 0.24 0.11 1.000 0.369 0.169
Institutional Costs for Training Staff .06 0.56 0.32 0.12 1.000 0.571 0.214
Institutional Bad Debt .15 0.60 0.20 0.20 1.000 0.333 0.333
Institutional Costs of Recruiting Staff .05 0.66 0.17 0.17 1.000 0.258 0.258
Institutional Costs of Recruiting Volunteers .01 0.60 0.20 0.20 1.000 0.333 0.333
Societal Costs .15 0.33 0.33 0.33 1.000 1.000 1.000

Synthesis 0.583 0.192 0.224 0.523 0.229 0.249

Benefit/Cost Ratio 0.734 0.630 2.013 0.811 0.537 1.819

Table 8 : The benefit/cost ratios of the three models given in the bottom row of the table are
obtained for both the distributive and ideal modes. Here one multiplies each of the six columns
of priorities of a model by the column of criteria weights on the left and adds to obtain the
synthesis of overall priorities, once for the benefits (top half of table) and once for the costs
(bottom half of table) and forms the ratios of corresponding synthesis numbers to arrive at the
benefit/cost ratio (bottom row of table).

I also performed marginal analysis to determine where the hospital should allocate
additional resources for the greatest marginal return. To perform marginal analysis, I first
ordered the alternatives by increasing cost priorities and then formed the benefit-to-cost ratios
corresponding to the smallest cost, followed by the ratios of the differences of successive
benefits to costs. If this difference in benefits is negative, the new alternative is dropped from

17
consideration and the process continued. The alternative with the largest marginal ratio is then
chosen. For the costs and corresponding benefits from the synthesis rows in Table 8 I obtained:
Costs: .20 .21 .59
Benefits: .12 .45 .43
Marginal Ratios: {.12} over {.20} `=` 0.60~~~~ {.45-.12} over {.21 - .20} `=`33~~~~
{.43-.45} over {.59 - .21}`=` -0.05

The third alternative is not a contender for resources because its marginal return is
negative. The second alternative is best. In fact, in addition to adopting the third model, the
hospital management chose the second model of hospice care for further development.

A Sustainable Metropolitan Growth Problem

In the following illustration there are nine alternatives evaluated in terms of benefit, cost
and risk impacts to sustain metropolitan growth. Here again one asks which is more risky (or
hazardous) and in the end one divides the benefit to cost ratios by the overall risk priorities of
each alternative. The alternatives are: build infrastructure (of roads, telecommunication,
banking, etc.), improve quality of life, reduce taxes, status quo (or do nothing), provide land for
expansion, foster increased tourism, expand port, support industries and improve regional
connections. The criteria in each of the three hierarchies are different and will not be described
in the text because they are laid out in the diagrams. The distributive mode was used to
synthesize the priorities of the alternatives. We only give the overall inconsistency in the case of
the benefits hierarchy. To save space we have not given all the matrices of paired comparisons.
We only illustrate with the matrices of criteria for each hierarchy and only one set of subcriteria
under social costs.

18
Inconsistency ratio for the entire benefits hierarchy = 0.0642.

8
9
10
 Industry Port Infra Region Life Tax Tourism Land Status

Benefit 0.191 0.128 0.125 0.113 0.104 0.103 0.092 0.091 0.052
Cost 0.235 0.172 0.104 0.135 0.085 0.060 0.098 0.066 0.044
B/C 0.813 0.744 1.202 0.985 1.224 1.717 0.939 1.379 1.182
Mgnl B/C 1.000 0.044 - 0.180 0.040 - 0.031 1.773 1.182
Risk 0.204 0.164 0.088 0.189 0.054 0.044 0.106 0.070 0.082
B/CR 3.984 4.537 13.659 5.212 22.667 39.023 8.858 19.70 14.415

The ranking of the alternatives descends from reduce taxes, improve quality of life, provide land,
maintain status quo, build infrastructure and so on. One could allocate resources proportionately
to these ratio scale outcomes.

8
 Criteria and Subcriteria Matrices

Benefits Create Increa Quali Improve Priorities

jobs se tax ty of infrastructu
base life re

Create jobs 1 4 1.3 3 0.431

Increase tax base 1/4 1 1/3 1/2 0.097
Quality of life 1/1.3 3 1 1.5 0.294
Improve 1/3 2 1/1.5 1 0.177
infrastructure

C.R. = 0.013

Which criterion is a more important benefit? In comparing the alternatives with respect to each
criterion in a separate matrix one asks: Which alternative yields greater benefit with respect to
that criterion?

Costs Physical Social Environmental Priorities

Physical 1 1.3 1.2 0.384
Social 1/1.3 1 1.2 0.323
Environmental 1/1.2 1/1.2 1 0.293

C.R. = 0.007

Which criterion is a more important cost? Which alternative incurs greater cost with respect to
that subcriterion?

Societal Costs Crime Traffic Deaths Poverty Government Priorities

Crime 1 3 4 1/3 1/1.4 0.192
Traffic 1/3 1 1.67 1/4 1/2 0.091
Deaths 1/4 1/1.67 1 1/5 1/5 0.056
Poverty 3 4 5 1 3 0.448
Government 1.4 2 5 1/3 1 0.213

C.R. = 0.041
9
Which subcriterion is a more important social cost?

Risk Economic Social Environmental Priorities

Economic 1 1.3 1.3 0.393

Social 1/1.3 1 1.2 0.322
Environmental 1/1.3 1.2 1 0.285

C.R. = 0.004

Which Criterion is a more important risk? Which alternative incurs greater risk with respect to
that subcriterion?

Absolute Measurement
Cognitive psychologists have recognized for some time that people are able to make two
kinds of comparisons - absolute and relative. In absolute comparisons, people compare
alternatives with a standard in their memory that they have developed through experience. In
relative comparisons, they compared alternatives in pairs according to a common attribute, as we
did throughout the hospice example.
People use absolute measurement (sometimes also called rating) to rank independent
alternatives one at a time in terms of rating intensities for each of the criteria. An intensity is a
range of variation of a criterion that enables one to distinguish the quality of an alternative for
that criterion. An intensity may be expressed as a numerical range of values if the criterion is
measurable or in qualitative terms. For example, if ranking students is the objective and one of
the criteria on which they are to be ranked is performance in mathematics, the mathematics
ratings might be: excellent, good, average, below average, poor; or, using the usual school
terminology, A, B, C, D, and F. Relative comparisons are first used to set priorities on the
ratings themselves. If desired, one can fit a continuous curve through the derived intensities.
This concept may go against our socialization. However, it is perfectly reasonable to ask how
much an A is preferred to a B or to a C. The judgment of how much an A is preferred to a B
might be different under different criteria. Perhaps for mathematics an A is very strongly
10
preferred to a B, while for physical education an A is only moderately preferred to a B. So the
end result might be that the ratings are scaled differently. For example one could have the
following scale values for the ratings:
PHYSICAL
MATH EDUCATION
A 0.50 0.30
B 0.30 0.30
C 0.15 0.20
D 0.04 0.10
E 0.01 0.10

The alternatives are then rated or ticked off one at a time on the intensities.
I will illustrate absolute measurement with an example. A firm evaluates its employees
for raises. The criteria are dependability, education, experience, and quality. Each criterion is
subdivided into intensities, standards, or subcriteria (Figure 3). The managers set priorities for
the criteria by comparing them in pairs. They then pairwise compare the intensities according to
priority with respect to their parent criterion (as in Table 9) or with respect to a subcriterion if
they are using a deeper hierarchy. The priorities of the intensities are divided by the largest
intensity for each criterion (second column of priorities in Figure 3). Table 9 shows a paired
comparison matrix of intensities with respect to dependability. The managers answer the
question: which intensity is more important and by how much with respect to dependability.
Finally, the managers rate each individual (Table 10) by assigning the intensity rating that
applies to him or her under each criterion. The scores of these intensities are each weighted by
the priority of its criterion and summed to derive a total ratio scale score for the individual
(shown on the right of Table 10). These numbers belong to a ratio scale, and the managers can
give salary increases precisely in proportion to the ratios of these numbers. Adams gets the
highest score and Kesselman the lowest. This approach can be used whenever it is possible to
set priorities for intensities of criteria; people can usually do this when they have sufficient
experience with a given operation. This normative mode requires that alternatives be rated one
by one without regard to how many there may be and how high or low any of them rates on prior
standards. Some corporations have insisted that they no longer trust the normative standards of
their experts and that they prefer to make paired comparisons of their alternatives. Still, when
there is wide agreement on standards, the absolute mode saves time in rating a large number of
alternatives.

11
 Outstandi Above Avera Below Unsatisfact Priorities
ng Average ge Average ory
Outstanding 1.0 2.0 3.0 4.0 5.0 0.419
Above Average 1/2 1.0 2.0 3.0 4.0 0.263
Average 1/3 1/2 1.0 2.0 3.0 0.160
Below Average 1/4 1/3 1/2 1.0 2.0 0.097
Unsatisfactory 1/5 1/4 1/3 1/2 1.0 0.062

C.R. = 0.015
Table 9: Ranking intensities: Which intensity is preferred most with respect to dependability
and how strongly?

Dependability Education Experience Quality

.4347 .2774 .1775 .1123 Total
1. Adams, V Outstanding Bachelor A Little Outstanding 0.646
2. Becker, L Average Bachelor A Little Outstanding 0.379
3. Hayat, F Average Masters A Lot Below 0.418
4. Kesselman, Above H.S. None Average 0.369
S Average Doctorate A Lot Above 0.605
5. O'Shea, K Average Doctorate A Lot Average 0.583
6. Peters, T Average Bachelor Average Above 0.456
7. Tobias, K Above Average
Average Average
Above
Average

Table 10: Ranking alternatives. The priorities of the intensities for each criterion are divided by
the largest one and multiplied by the priority of the criterion. Each alternative is rated on each
criterion by assigning the appropriate intensity. The weighted intensities are added to yield the
total on the right.

Homogeneity and Clustering

Think of the following situation: we need to determine the relative size of a blueberry and
a watermelon. Here, we need a range greater than 19. Human beings have difficulty
establishing appropriate relationships when the ratios get beyond 9. To resolve this human
difficulty, we can use a method in which we cluster different elements so we can rate them

12
within a cluster and then rate them across the clusters. We need to add other fruits to make the
comparison possible and then form groups of comparable fruits. In the first group we include the
blueberry, a grape, and a plum. In the second group we include the same plum, an apple, and a
grapefruit. In the third group we include the same grapefruit, a melon, and the watermelon. The
AHP requires reciprocal comparisons of homogeneous elements whose ratios do not differ by
much on a property, hence the absolute scale 19; when the ratios are larger, one must cluster
the elements in different groups and use a common element (pivot) that is the largest in one
cluster and the smallest element in the next cluster of the next higher order of magnitude. The
weights of the elements in the second group are divided by the priority of the pivot in that group
and then multiplied by the priority of the same pivot element (whose value is generally different)
from the first group, making them comparable with the first group. The process is then
continued. The AHP software program Expert Choice performs these functions for the user.
The reason for using clusters of a few elements is to ensure greater stability of the priorities in
face of inconsistent judgments. Comparing more than two elements allows for redundancy and
hence also for greater validity of real- world information. The AHP often uses seven elements
and puts them in clusters if there are more. (Elaborate mathematical derivations are given in the
AHP to show that the number of elements compared should not be too large in order to obtain
priorities with admissible consistency.)

Problems with Analytic Decision Making

At this point you may wonder why we have three different modes for establishing
priorities, the absolute measurement mode and the distributive and ideal modes of relative
measurement. Isn't one enough? Let me explain why we need more than one mode.
A major reason for having more than one mode is concerned with this question. What
happens to the synthesized ranks of alternatives when new ones are added or old ones deleted?
With consistent judgments, the original relative rank order cannot change under any single
criterion, but it can under several criteria.
Assume that an individual has expressed preference among a set of alternatives, and that
as a result, he or she has developed a ranking for them. Can and should that individual's
preferences and the resulting rank order of the alternatives be affected if alternatives are added to

13
the set or deleted from it and if no criteria are added or deleted, which would affect the weights
of the old criteria? What if the added alternatives are copies or near copies of one or of several
of the original alternatives and their number is large? Rank reversal is an unpleasant property if
it is caused by the addition of truly irrelevant alternatives. However, the addition of alternatives
may just reflect human nature: the straw that broke the camel's back was considered irrelevant
along with all those that went before it. Mathematically, the number and quality of newly added
alternatives are known to affect preference among the original alternatives. Most people,
unaided by theory and computation, make each decision separately, and they are not very
concerned with rank reversal unless they are forced for some reason to refer to their earlier
conclusions. I think it is essential to understand and deal with this phenonemon.

An Example of Rank Reversal

Two products A and B are evaluated according to two equally important attributes P and
Q as in the following matrices:

P A B Priorities Q A B Priorities
A 1 5 .83 A 1 1/3 .25
B 1/5 1 .17 B 3 1 .75

We obtain the following priorities: WA = .542, W B = .458, and A is preferred to B.

A third product C is then introduced and compared with A and B as follows:

P A B C Priorities Q A B C Priorities
A 1 5 1 .455 A 1 1/3 2 .222
B 1/5 1 1/5 .090 B 3 1 6 .666
C 1 5 1 .455 C 1/2 1/6 1 .111

Synthesis yields WA = .338, WB = .379, and W C = .283. Here B is preferred to A and

there is rank reversal.
For a decision theory to have a lasting value, it must consider how people make decisions
naturally and assist them in organizing their thinking to improve their decisions in that natural
direction. Its assumptions should be tied to evolution and not to present day determinism. This
is the fundamental concept on which the AHP is based. It was developed as a result of a decade

14
of unsuccessful attempts to use normative theories, with the assistance of some of the world's
best minds, to deal with negotiation and trade-off in the strategic political and diplomatic arena at
the Arms Control and Disarmament Agency in the Department of State. In the early 1970s, I
asked the question, how do ordinary people process information in their minds in attempting to
make a decision and how do they express the strength of their judgments? The answer to this
question led me to consider hierarchies and networks, paired comparisons, ratio scales,
homogenity and consistency, priorities, ranking, and the AHP.

Resolution of the Rank Preservation Issue

Early developers of utility theory axiomatically ruled that introducing alternatives,
particularly "irrelevant" ones, should not cause rank reversal [Luce and Raiffa 1957]. A theory
that rates alternatives one at a time, as in the absolute measurement salary-raise example given
above, assumes the existence of past standards established by experts for every decision problem
and would thus assume that every decision can be made by rating each alternative by itself
without regard to any other alternative and would inexorably preserve rank. But if past standards
are inapplicable to new problems and if experts are not sufficiently familiar with the domain of a
decision to establish standards and the environment changes rapidly, an insistence on making
decisions based on standards will only force the organization to shift its efforts from solving the
problem to updating its standards. For example, practitioners have improvised many techniques
to relate standards defined by utility functions in the context of a specific decision problem.
Connecting theory to practice is important but often difficult. We need to distinguish between
fixing the axioms of a decision theory to be followed strictly in all situations and learning and
revising in the process of ma king a decision. The rank preservation axioms of utility theory and
the AHP parallel the axioms of the classical frequentist method of statistics and Bayesian theory.
Bayesian theory violates the axioms of statistics in updating prediction by including information
from a previous outcome, a process known as learning. When we integrate learning with
decision making, we question some of the static basic axioms of utility theory.
The AHP avoids this kind of formulation and deals directly with paired comparisons of
the priority of importance, preference, or likelihood (probability) of pairs of elements in terms of
a common attribute or criterion represented in the decision hierarchy. We believe that this is the

15
natural (but refined) method that people followed in making decisions long before the
development of utility functions and before the AHP was formally developed.
The major objection raised against the AHP by practitioners of utility theory has been this
issue of rank reversal. The issues of rank reversal and preference reversal have been much
debated in the literature as a problem of utility theory [Grether and Plott 1979; Hershey and
Schoemaker 1980; Pommerehne, Schneider, and Zweifel 1982; Saaty 1994, Chapter 5; Tversky
and Simonson 1993, Tversk y, Slovic, and Kahneman 1990].
Regularity is a condition of choice theory that has to do with rank preservation. R.
Corbin and A. Marley [1974] provide a utility theory example of rank reversal. It "concerns a
lady in a small town, who wishes to buy a hat. She enters the only hat store in town, and finds
two hats, A and B, that she likes equally well, and so might be considered equally likely to buy.
However, now suppose that the sales clerk discovers a third hat, C, identical to B. Then the lady
may well choose hat A for sure (rather than risk the possibility of seeing someone wearing a hat
just like hers), a result that contradicts regularity." Utility theory has no clear analytical answer
to this paradox nor to famous examples having to do with phantom alternatives and with decoy
alternatives that arise in the field of marketing [Saaty 1994].
Because of such examples, it is clear that one cannot simply use one procedure for every
decision problem because that procedure would either preserve or not preserve rank. Nor can
one introduce new criteria that indicate the dependence of the alternatives on information from
each new alternative that is added. In the AHP, this issue has been resolved by adding the ideal
mode to the normalization mode in relative measurement. The ideal mode presents an
alternative that is rated low or "irrelevant" on all the criteria from affecting the rank of higher
rated alternatives.
In the AHP, we have one way to allow rank to change, (1) below, and two ways to
preserve rank, (2) and (3) below.
(1) We can allow rank to reverse by using the distributive mode of the relative
measurement approach of the AHP.
(2) We can preserve rank in the case of irrelevant alternatives by using the ideal mode of
the AHP relative measurement approach.

16
 (3) We can preserve rank absolutely by using the absolute measurement mode of the
AHP.
As a recap, in relative measurement, we use normalization by dividing by the sum of the
priorities of the alternatives to define the distributive mode. In this mode, we distribute the unit
value assigned to the goal of a decision proportionately among the alternatives through
normalization. When we add a new alternative, it takes its share of the unit from the previously
existing alternatives. This mode allows for rank reversal because dependence exists among the
alternatives, which is attributable to the number of alternatives and to their measurements values
and which is accounted for through normalization. For example, multiple copies of an
alternative can affect preference for that alternative in some decisions. We need to account for
such dependence in allocating resources, in voting and in distributing resources among the
alternatives.
In the ideal mode, we would simply compare a new alternative with the ideal (with the
weight of one), and it would fall below or above the ideal and could itself become the ideal. As a
result, an alternative that falls far below the ideal on every criterion cannot affect the rank of the
best chosen alternative. Using absolute measurement, we rate alternatives one at a time with
respect to each criterion, and this process cannot give rise to rank reversal.
I conducted an experiment involving 64,000 hierarchies with priorities assigned
randomly to criteria and to alternatives to test the number of times the best choice obtained by
the distributive and ideal modes coincided with each other. It turns out that the two methods
yield the same top alternative 92 percent of the time. I obtained similar results for the top two
alternatives [Saaty and Vargas 1993a].

Decision Making in Complex Environments

The AHP makes group decision making possible by aggregating judgments in a way that
satisfies the reciprocal relation in comparing two elements. It then takes the geometric mean of
the judgments. When the group consists of experts, each works out his or her own hierarchy, and
the AHP combines the outcomes by the geometric mean. If the experts are ranked according to
their expertise in a separate hierarchy, we can raise their individual evaluations to the power of

17
their importance or expertise priorities before taking the geometric mean. We have also used
special questionnaires to gather data in the AHP.
Practitioners have developed multicriteria decision approaches largely around techniques
for generating scales for alternatives. But I believe that making decisions in real life situations
depends on the depth and sophistication of the structures decision makers use to represent a
decision or prediction problem rather than simply on manipulations - although they are also
important. It seems to me that decision making and prediction must go hand in hand if a
decision is to survive the test of the forces it may encounter. If one understands the lasting value
of a best decision, one will want to consider feedback structures with possible dependencies
among all the elements. These would require iterations with feedback to determine the best
outcome and the most likely to survive. I believe that ratio scales are ma thematically compelling
for this process. The AHP is increasingly used for decisions with interdependencies (the
hierarchic examples I have described are simple special cases of such decisions). I describe
applications of feedback in Chapter 8 of Saaty [1994] and in a book I am currently writing on
applications of feedback. I and my colleague Luis Vargas used the supermatrix feedback
approach of the AHP in October 1992 to show that the well-known Bayes theorem used in
decision making follows from feedback in the AHP. Furthermore, we have since shown through
examples that some decisions with interdependence can be treated by the AHP but not Bayes
theorem [Saaty and Vargas 1993b].
The essence of the AHP is the use of ratio scales in elaborate structures to assess complex
problems. Ratio scales are the fundamental tool of the mind that people use to understand
magnitudes. The AHP well fits the words of Thomas Paine in his Common Sense, "The more
simple anything is, the less liable it is to be disordered and the easier repaired when disordered."
In August 1993, Sarah Becker compiled a list of what are now more than 1,000 papers,
books, reports, and dissertations written on the subject of AHP, an early version of which is
included as a bibliography in my 1994 book [Saaty 1994].

The Benefits of Analytic Decision Making

Many excellent decision makers do not rely on a theory to make their decisions. Are
their good decisions accidental, or are there implicit logical principles that guide the mind in the

18
process of making a decision, and are these principles complete and consistent? I believe that
there are such principles, and that in thoughtful people, they work as formalized and described in
the analytic hierarchy process. Still academics differ about how people should and should not
make decisions. Experiments with people have shown that what people do differs from the
theoretical and normative considerations the experts consider important. This may lead one to
believe that analytical decision making is of little value. But our experience and that of many
others indicate the opposite.
Analytic decision making is of tremendous value, but it must be simple and accessible to
the lay user, and must have scientific justification of the highest order. Here are a few ideas
about the benefits of the descriptive analytical approach. First is the morphological way of
thoroughly modeling the decision, inducing people to make explicit their tacit knowledge. This
leads people to organize and harmonize their different feelings and understanding. An agreed
upon structure provides ground for a complete multisided debate. Second, particularly in the
framework of hierarchies and feedback systems, the process permits decision makers to use
judgments and observations to surmise relations and strengths of relations in the flow of
interacting forces moving from the general to the particular and to make predictions of most
likely outcomes. Third, people are able to incorporate and trade off values and influences with
greater accuracy of understanding than they can using language alone. Fourth, people are able to
include judgments that result from intuition and emotion as well those that result from logic.
Reasoning takes a long time to learn, and it is not a skill commo n to all people. By representing
the strength of judgments numerically and agreeing on a value, decision- making groups do not
need to participate in prolonged argument. Finally, a formal approach allows people to make
gradual and more thorough revisions and to combine the conclusions of different people studying
the same problem in different places. One can also use such an approach to piece together partial
analyses of the components of a bigger problem, or to decompose a larger problem into its
constituent parts. This is an exhaustive list of the uses of the AHP. However, to deal with
complexity we need rationality, and that is best manifested in the analytical approach.

19
References
Corbin, R. and Marley, A.A.J. 1974, "Random utility models with equality: An apparent, but not
actual, generalization of random utility models," Journal of Mathematical Psychology, Vol. 11,
No. 3, pp. 274-293.

Grether, D.M. and Plott, C.R. 1979, "Economic theory of choice and the preference reversal
phenomenon," The American Economic Review, Vol. 69, No. 4, pp. 623-638.

Hershey, J.C. and Schoemaker, P.J.H. 1980, "Prospect theory's reflection hypothesis: A critical
examination," Organization of Behavioral Human Performances Vol. 25, No. 3, pp. 395-418.

Luce, R.D. and Raiffa, H. 1957, Games and Decisions, John Wiley and Sons, New York.

Pommerehne, W.W., Schneider, F. and Zweifel, P. 1982, "Economic theory of choice and the
preference reversal phenomenon: A reexamination," The American Economic Review Vol. 72,
No. 3, pp. 569-574.

Saaty, T.L. 1977, "A scaling method for priorities in hierarchical structures," Journal of
Mathematical Psychology, Vol. 15, No. 3, pp. 234-281.

Saaty, T.L. 1982, Decision Making for Leaders, RWS Publications, 4922 Ellsworth Ave.,
Pittsburgh, Pennsylvania.

Saaty, T.L. 1986, "Axiomatic foundation of the analytic hierarchy process," Management
Science, Vol. 32, No. 7., pp. 841-855.

Saaty, T.L. 1994, Fundamentals of the Analytic Hierarchy Process, RWS Publications, 4922
Ellsworth Ave., Pittsburgh, Pennsylvania.
Saaty, T.L. and Alexander, J. 1989, Conflict Resolution: The Analytic Hierarchy Process,
Praeger, New York.

20
Saaty, T.L. and Vargas, L.G. 1991, Prediction, Projection and Forecasting, Kluwer Academic
Publishers, Boston, Massachusetts.
Saaty, T.L. and Vargas, L.G. 1993a, "Experiments on rank preservation and reversal in relative
measurement", Mathematical and Computer Modelling, Vol. 17, No. 4/5, pp. 13-18.

Saaty, T.L. and Vargas L.G. 1993b, "Diagnosis with dependent symptoms: Bayes theorem
derived from the analytic hierarchy process", working paper, University of Pittsburgh,
Pittsburgh, PA.

Tversky, A.; Slovic, P; and Kahneman, D. 1990, "The causes of preference reversal," The
American Economic Review, Vol. 80, No. 1, pp. 204-215.

Tversky, A. and Simonson, I. 1993, "Context-dependent preferences," Management Science,

Vol. 39, No. 10, pp. 1179-1189.

21
 Mathematical Appendix
The AHP has four axioms, (1) reciprocal judgments, (2) homogeneous elements, (3)
hierarchic or feedback dependent structure, and (4) rank order expectations.
Assume that one is given n stones, A 1 , ..., An, with known weights w 1 , ..., wn , respectively,
and suppose that a matrix of pairwise ratios is formed whose rows give the ratios of the weights
of each stone with respect to all others. Thus one has the equation:

w1 w1 w1 w 2 K w 1 w n w1 w 1

K w 2 wn w 2
w2 w 1 w 2 w2 = n w 2 = nw
Aw =
M M K M M M

wn w1 wn w2 K wn wn w n w n

where A has been multiplied on the right by the vector of weights w. The result of this
multiplication is nw. Thus, to recover the scale from the matrix of ratios, one must solve the
problem Aw = nw or (A - nI)w = 0. This is a system of homogeneous linear equations. It has a
nontrivial solution if and only if the determinant of A-nI vanishes, that is, n is an eigenvalue of
A. Now A has unit rank since every row is a constant multiple of the first row. Thus all its
eigenvalues except one are zero. The sum of the eigenvalues of a matrix is equal to its trace, the
sum of its diagonal elements, and in this case the trace of A is equal to n. Thus n is an
eigenvalue of A, and one has a nontrivial solution. The solution consists of positive entries and
is unique to within a multiplicative constant.
To make w unique, one can normalize its entries by dividing by their sum. Thus, given
the comparison matrix, one can recover the scale. In this case, the solution is any column of A
normalized. Notice that in A the reciprocal property aji = 1/aij holds; thus, also aii = 1. Another
property of A is that it is consistent: its entries satisfy the condition ajk = aik/aij. Thus the entire
matrix can be constructed from a set of n elements which form a chain across the rows and
columns.
In the general case, the precise value of w i /wj cannot be given, but instead only an
estimate of it as a judgment. For the moment, consider an estimate of these values by an expert
who is assumed to make small perturbations of the coefficients. This implies small perturbations
of the eigenvalues. The problem now becomes A'w' = 8maxw' where 8max is the largest

22
eigenvalue of A'. To simplify the notation, we shall continue to write Aw = 8max w, where A is
the matrix of pairwise comparisons. The problem now is how good is the estimate of w. Notice
that if w is obtained by solving this problem, the matrix whose entries are w i/w j is a consistent
matrix. It is a consistent estimate of the matrix A. A itself need not be consistent. In fact, the
entries of A need not even be transitive; that is, A1 may be preferred to A2 and A2 to A3 but A 3
may be preferred to A1 . What we would like is a measure of the error due to inconsistency. It
turns out that A is consistent if and only if 8max = n and that we always have 8max n.
Since small changes in aij imply a small change in 8max , the deviation of the latter from n
is a deviation from consistency and can be represented by (8max - n)/(n-1), which is called the
consistency index (C.I.). When the consistency has been calculated, the result is compared with
those of the same index of a randomly generated reciprocal matrix from the scale 1 to 9, with
reciprocals forced. This index is called the random index (R.I.). The following gives the order
of the matrix (first row) and the average R.I. (second row):

n 1 2 3 4 5 6 7 8 9 10
Random Consistency Index (R.I.) 0 0 .52 .89 1.1 1.2 1.3 1.4 1.4 1.4
1 5 5 0 5 9

The ratio of C.I. to the average R.I. for the same order matrix is called the consistency
ratio (C.R.). A consistency ratio of 0.10 or less is positive evidence for informed judgment.
The relations aji = 1/aij and aii = 1 are preserved in these matrices to improve consistency.
The reason for this is that if stone #1 is estimated to be k times heavier than stone #2, one should
require that stone #2 be estimated to be 1/k times the weight of the first. If the consistency ratio
is significantly small, the estimates are accepted; otherwise, an attempt is made to improve
consistency by obtaining additional information. What contributes to the consistency of a
judgment are (1) the homogeneity of the elements in a group, that is, not comparing a grain of
sand with a mountain; (2) the sparseness of elements in the group, because an individual cannot
hold in mind simultaneously the relations of many more than a few objects; and (3) the
knowledge and care of the decision maker about the problem under study.
Figure 4 shows five areas to which we can apply to the paired comparison process in a
matrix and use the 19 scale to test the validity of the procedure. We can approximate the

23
priorities in the matrix by assuming that it is consistent. We normalize each column and then
take the average of the corresponding entries in the columns.

Figure 4: Five figures drawn with appropriate size of area. The object is to compare them in
pairs to reproduce their relative weights.
The actual relative values of these areas are A=0.47, B=0.05, C=0.24, D=0.14, and
E=0.09 with which the answer may be compared. By comparing more than two alternatives in a
decision problem, one is able to obtain better values for the derived scale because of redundancy
in the comparisons, which helps improve the overall accuracy of the judgments.

24
 Abstract
People make three general types of judgments to express importance, preference, or
likelihood and use them to choose the best among alternatives in the presence of environmental,
social, political, and other influences. They base these judgments on knowledge in memory or
from analyzing benefits, costs, and risks. From past knowledge, we sometimes can develop
standards of excellence and poorness and use them to rate the alternatives one at a time. This is
useful in such repetitive situations as student admissions and salary raises that must conform
with established norms. Without norms one compares alternatives instead of rating them.
Comparisons must fall in an admissible range of consistency. The analytic hierarchy process
(AHP) includes both the rating and comparison methods. Rationality requires developing a
reliable hierarchic structure or feedback network that includes criteria of various types of
influence, stakeholders, and decision alternatives to determine the best choice.

Keywords: Decisions, Hierarchies, Priorities, Benefits/Costs, Risk, Rank, Paired Comparisons,

Scales.

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 Biography
Thomas Saaty is a University Professor at the University of Pittsburgh. From
1969-1979, he was a professor at the Wharton School, University of Pennsylvania. From
1963-1769, he worked at the Arms Control and Disarmament Agency in Washington and
prior to that for MIT in operations research. He received his Ph.D. in mathematics with a
minor in physics from Yale University. His research interests include decision making,
planning, and the analysis of neural functions. In search for an effective means to deal
with weapons tradeoffs, resource allocation and decision making, he developed the
Analytic Hierarchy Decision Process. He has written books including Modern Nonlinear
Equations, Nonlinear Mathematics, Graph Theory, The Four Color Problem, Behavioral
Mathematics, Queuing Theory, Optimization in Integers, Embracing the Future, along
with many papers and 8 books on the theory and applications of the Analytic Hierarchy
Process. He is a consultant to many corporations and governments and is codeveloper of
the softwares Expert Choice and of Advanced Expert Choice which generalizes decision
making with feedback.

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