Title: Multi-criteria analysis as a tool to cope with asymmetric information. An application to the hospitality sector
Authors: De Brucker, Klaas
Meesters, Inge
Issue Date: Jul-2016
Publisher: EURO - The Association of European Operational Research Societies
Host Document: Conference Handbook 28th European Conference on Operational Research ( pages:114-114
Series Title: Paper MC-06-4, Session 'Urban and territorial planning in MCDA 1', Stream: 'Multiple Criteria Decision Aiding'
Conference: 28th European Conference on Operational Research edition:28th location:Poznan (Poland) date:3-6 July 2016
Article number: MC-06-4 (page 114)
Abstract: The hospitality sector is a typical example of market actors being confronted by asymmetric information. Rating systems have been developed to cope with this type of market failure. These categorise hotels, often using a star system (i.e., a sorting or ‘beta’ problem formulation). Such systems have evolved (initially through private initiative and today also through government agencies) rather spontaneously, without being grounded in the theory of multi-criteria analysis (MCA). This paper looks at the different rating systems through a MCA lens. We unravel the main characteristics of the systems (viz., the underlying aggregation procedure) used in a number of countries and identify some caveats. The main problems are that (1) the underlying criteria and (2) aggregation procedure are unfamiliar to clients, (3) they differ between countries, (4) do not address the heterogeneity of customer preferences and (5) often only measure the availability of specific services and infrastructure, rather than their intrinsic quality. To remedy the problems, we propose a novel approach which consists of presenting the information relevant for all customers in a disaggregated but structured way, using a MCA evaluation matrix (i.e., a description, or in Roy’s terms, a ‘delta’ problem formulation). The MCA matrix is designed so that customers can zoom in on those criteria they find most relevant. Finally, we test the implementation potential of our novel approach through stakeholder interviews.
Publication status: published
KU Leuven publication type: IMa
Appears in Collections:Faculty of Economics and Business (FEB) - miscellaneous
Department of ECON-CEDON, Campus Brussels

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