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Tonight we’ll talk about one approach to structuring decision-making on a specific topic, that is, AHP, or Analytic Hierarchy Process.
    The first step is to develop a hierarchy by breaking the problem down into its components, and then prioritizing them. The important thing is not the mathematics of it so much as the concept.
    Let’s say, if I was trying to buy a house, I start with my main goal. And then I break it down into smaller parts. I would have to determine the goal for the house- hunting effort. Well, let’s just say, make the best choice in buying a new house, that’s the goal.
     Now that you’ve established a goal, you establish your criteria. Under criteria I would list what were the important factors that will influence the decision, things like the cost, location, floor plan or the layout of the rooms.
     Then I get down to the subcriteria under each of these criteria. Let’s say, under floor plan, the subcriteria are, you want a big kitchen, 3 bedrooms, a basement. After you’ve determined all the criteria and subcriteria, you go back and start making pair wise comparisons between them.
     You move through the hierarchy making judgments about one pair of choices at a time. So AHP requires you to develop a schematic model of what you’re looking for. And when you start comparing them, it enables you to come up with the relative importance of each factor at a given level. It not only helps make the best decision, you’re also a lot clearer on why you made the decision.