About Multi-Criteria Decision Making
Multi-Criteria Decision Making (MCDM) is a structured way to make decisions between two or more choices where there is not a single criteria (such as net present value in dollars) to compare the choices against.
For example, when you are looking at a house, you cannot reduce everything to dollars. Of course, realtors try to when they place a house on the market for a certain price, but that dollar value is not necessarily how much that house is worth to you. Moreover, the amount you have to spend on a house is variable. You could spend more and forgo vacations for a couple years, or you could spend less and buy a new car.
How do you incorporate those lifestyle choices with the intangibles such as short commute, quiet street, proximity to a good school or friends?
One solution is to use Multi-Criteria Decision Theory to help you decide. Using this structured approach you assign weights to criteria, rank each option against each criteria and then calculate a weighted total ranking to choose the winner. Even if the actual points do not show a clear winner, the structured discussion of which criteria are more important and how houses rank against each criteria can build consensus and reveal hidden assumptions.
As Multi-Criteria Decision Making is subject independent, you can use Real Estate Decision Maker to choose between cars, job offers or any other choice where there are many factors to take into consideration. To do so, simply write down aliases for the real estate specific criteria. For example, everytime you see 'Quiet Street' mentally replace it with 'Gas Mileage'.