Multidimensional decision analysis in public investment analysis: theory and practice

Abstract

Most important investment decisions involve several criteria or dimensions, e.g. a weapon system could be judged by cost, portability, reliability and firepower. Moreover, the values of these dimensions that alternative courses of action will produce is rarely known for certain, because they will occur in the future or because analysis to obtain the information would be too expensive or too time- consuming. These comments apply to public sector investment particularly, because the market does not provide a price that incorporates several dimensions for public goods, and because much public investment is one-off, having rarely been done before, e.g., Medibank.