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European Journal of Operational Research 193 (2009) 204211

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Decision Support

An application of the TODIM method to the multicriteria

rental evaluation of residential properties
a,* b,1
Luiz Flavio Autran Monteiro Gomes , Lus Alberto Duncan Rangel
a
Ibmec/RJ, Business Administration, Av. Presidente Wilson 118, 20030-020 Rio de Janeiro, RJ, Brazil
b
School of Industrial and Metallurgical Engineering, Fluminense Federal University, Av. dos Trabalhadores 420, 27255-125 Volta Redonda, RJ, Brazil

Received 2 April 2007; accepted 26 October 2007

Available online 5 November 2007

Abstract

This article presents an evaluation study of residential properties carried out together with real estate agents in the city of Volta Red-
onda, Brazil. The study aimed to dene a reference value for the rents of these properties using the TODIM method of Multicriteria
Decision Aiding. By applying this method to the ordering of properties with dierent characteristics, a ranking of all the properties
was obtained and, as a result of this, diverse ranges of rental values for the properties under analysis. The study was complemented
by an analysis of the sensitivity of the numerical results obtained.
 2007 Elsevier B.V. All rights reserved.

Keywords: Multiple criteria analysis; Real estate market; Prospect theory

1. Introduction
Brazil is the fth largest country in the world. It has a
population of around 190 million people and 4500 miles
of coastline. Due to the scale of the Brazilian territory,
the real estate market presents a wide variety of economic
conditions as well as diering supply and demand charac-
teristics. The percentage of housing decit varies according
to the region of the country. It has historically been highest
in the Northeast and lowest in the Southern region of the
country. Real estate activity has been intense even in the
most developed Brazilian states such as Sao Paulo and
Rio de Janeiro.
The rental evaluation of a property is one of the most
important tasks for those who work in the Brazilian real
estate market. This evaluation is generally based on quan-
titative and qualitative criteria employing various simple
methods (Guimaraes Neto, 1992, Pessoa, 1992). Among
*
Corresponding author. Tel.: +55 21 45034053; fax: +55 21 25126173.
E-mail addresses: autran@ibmecrj.br (L.F. Autran Monteiro Gomes),
duncan@metal.eeimvr.u.br (L.A. Duncan Rangel).
1
Tel.: +55 24 33424896.
these methods, the most commonly used are the Compara-
tive Method and the Income Method. In the Comparative
Method, similar properties at locations close to the prop-
erty in question are checked, and based on comparisons
with the data obtained, the value of the rent is established.
This method is the most practiced in the real estate market
and the one which normally presents the value closest to
the market value. The Income Method denes the value
of the rent as a percentage of the sale value of the property.
It is simple to apply, but depending on the supply and
demand in the region in question, may not generate com-
petitive and practicable values in the market.
This article describes the use of a Multicriteria Decision
Aiding method in evaluating residential properties available
for rent in the city of Volta Redonda, in the State of Rio de
Janeiro, Brazil. In the majority of cases, the criteria used to
make the evaluation of the alternatives are conicting. For
example, what would be most valued: a small, old house
in an excellent residential neighborhood, close to the center
or a large, new property with a swimming pool and leisure
area in a neighborhood far from the downtown area? In this
study, the TODIM method (Gomes and Lima, 1992a,b;
Trotta et al., 1999) was used to order the alternatives of

0377-2217/$ - see front matter  2007 Elsevier B.V. All rights reserved.
doi:10.1016/j.ejor.2007.10.046
 L.F. Autran Monteiro Gomes, L.A. Duncan Rangel / European Journal of Operational Research 193 (2009) 204211
the residential properties for rent. After the ordering, it
becomes easier to dene the rental values, once previously
evaluated properties, that is, those with previously dened
rental values, have been included in the set of alternatives.
Other examples of discrete multicriteria valuation can be
seen in Stagl (2004, 2007) and Gamper et al. (2006).
2. The TODIM method
The TODIM method (an acronym in Portuguese of
Interactive and Multicriteria Decision Making), conceived
in its current form at the beginning of the nineties, is a dis-
crete multicriteria method based on Prospect Theory
(Kahneman and Tversky, 1979). This means that underly-
ing the method is a psychological theory, which was the sub-
ject of the Nobel Prize for Economics awarded in 2002
(Roux, 2002). Thus, while practically all other multicriteria
methods start from the premise that the decision maker
always looks for the solution corresponding to the maxi-
mum of some global measure of value for example, the
highest possible value of a multiattribute utility function,
in the case of MAUT (Keeney and Raia, 1993) the
TODIM method makes use of a global measurement of
value calculable by the application of the paradigm of Pros-
pect Theory. In this way, the method is based on a descrip-
tion, proved by empirical evidence, of how people eectively
make decisions in the face of risk. Although not all multicri-
teria problems deal with risk, the shape of the value func-
tion of the TODIM method is the same as the gain/loss
function of Prospect Theory. The use of TODIM relies on
a global multiattribute value function. This function is built
in parts, with their mathematical descriptions reproducing
the gain/loss function of Prospect Theory. The global mul-
tiattribute value function of TODIM then aggregates all
measures of gains and losses over all criteria.
In its calculations the TODIM method must test specic
forms of the losses and gains functions. Each one of the
forms depends on the value of one single parameter. The
forms, once validated empirically, serve to construct
the additive dierence function of the method. This notion
of an additive utility function is taken from Tversky (1969).
The additive dierence function is indeed a global multiat-
tribute value function and reects the dominance measure-
ments of each alternative over each other alternative. In
this sense, TODIM maintains a similarity with outranking
methods, such as PROMETHEE ([Brans and Mareschal,
1990), because the global value of each alternative is rela-
tive to its dominance over other alternatives in the set.
Although it appears complicated to have to test the validity
of the application of the paradigm to the database, which
may on occasions oblige the decision analyst to use other
forms of the losses and gains functions, in fact it is not
so. Since the rst practical uses of the TODIM method,
back in the nineties, the same two mathematical forms have
been used successfully, and have been validated empirically
in dierent applications (Gomes and Lima, 1992a,b; Trotta
et al., 1999).
205
From the construction of the aforementioned TODIM
additive dierence function, which functions as a multiat-
tribute value function and, as such, must also have its use
validated by the verication of the condition of mutual
preferential independence (Keeney and Raia, 1993;
Clemen and Reilly, 2001), the method leads to a global
ordering of the alternatives. It can be observed that the
construction of the multiattribute value function, or addi-
tive dierence function, of the TODIM method is based
on a projection of the dierences between the values of
any two alternatives (perceived in relation to each crite-
rion) to a referential criterion or reference criterion.
The TODIM method makes use of pair comparisons
between the decision criteria, using technically simple
resources to eliminate occasional inconsistencies arising
from these comparisons. It also allows value judgments
to be carried out in a verbal scale, using a criteria hierar-
chy, fuzzy value judgments and making use of interdepen-
dence relationships among the alternatives. It is a
noncompensatory method in the sense that tradeos do
not occur (Bouyssou, 1986).
Roy and Bouyssou (1993), talking about the TODIM
method, state that it is: ...a method based on the French
School and the American School. It combines aspects of
the Multiattribute Utility Theory, of the AHP method
and the ELECTRE methods (p. 638).
The concept of introducing expressions of losses and
gains in the same multiattribute function, present in the
formulation of the TODIM method, gives this method
some similarity to the PROMETHEE methods, which
make use of the notion of net outranking ow. Barba-
Romero and Pomerol (2000) have stated the following in
respect of the TODIM method: it is based on a notion
extremely similar to a net ow, in the PROMETHEE
sense (p. 229).
Consider a set of n alternatives to be ordered in the pres-
ence of m quantitative or qualitative criteria, and assume
that one of these criteria can be considered as the reference
criterion. After the denition of these elements, experts are
asked to estimate, for each one of the qualitative criteria c,
the contribution of each alternative i to the objective asso-
ciated with the criterion. This method requires the values of
the evaluation, of the alternatives in relation to the criteria,
to be numerical and to be normalized; consequently the
qualitative criteria evaluated in a verbal scale are trans-
formed into a cardinal scale. The evaluations of the quan-
titative criteria are obtained from the performance of the
alternatives in relation to the criteria, such as, for example,
the level of noise measured in decibels, the power of an
engine measured in horsepower or a students mark in a
subject, etc.
TODIM can therefore be used for qualitative as well as
quantitative criteria. Verbal scales of qualitative criteria
are converted to cardinal ones and both types of scales
are normalized. The relative measure of dominance of one
alternative over another is found for each pair of alterna-
tives. This measure is computed as the sum over all criteria
206 L.F. Autran Monteiro Gomes, L.A. Duncan Rangel / European Journal of Operational Research 193 (2009) 204211

of both relative gain/loss values for these alternatives. The
parts in this sum will be either gains, losses, or zeros,
depending on the performance of each alternative with
respect to every criterion.
The evaluation of the alternatives in relation to all the cri-
teria produces the matrix of evaluation, where the values are
all numerical. Their normalization is then performed, using,
for each criterion, the division of the value of one alternative
by the sum of all the alternatives. This normalization is car-
ried out for each criterion, thus obtaining a matrix, where all
the values are between zero and one. It is called the matrix of
normalized alternatives scores against criteria. P = [Pnm],
with n indicating the number of alternatives and m the num-
ber of criteria, as shown in Table 1.
After the attribution of the weights of the criteria and
their normalization, the partial matrices of dominance
and the nal matrix of dominance must be calculated.
The decision makers must indicate which criterion r is to
be chosen as the reference criterion for the calculations
according to the relative importance assigned to each crite-
rion. In this way, the criterion with the highest value
accorded to its importance will usually be chosen as the ref-
erence criterion. The weight of each criterion is determined
by the decision makers on a numerical scale (e.g., from 1 to
5) and is then normalized. Thus, wrc is the weight of crite-
rion c divided by the weight of the reference criterion r.
Using wrc allows all pairs of dierences between perfor-
mance measurements to be translated into the same dimen-
sion, i.e. that of the reference criterion. The measurement
of dominance of each alternative Ai over each alternative
Aj, now incorporated to Prospect Theory, is given by the
mathematical expression
X
m
dAi ; Aj Uc Ai ; Aj 8i; j:
c1
Thus d(Ai, Aj) represents the measurement of dominance of
alternative Ai over alternative Aj; m is the number of crite-
ria; c is any criterion, for c = 1, . . . , m; wrc is equal to wc di-
vided by wr, where r is the reference criterion; Pic and Pjc
are, respectively, the performances of the alternatives Ai
and Aj in relation to c; h is the attenuation factor of the
losses; dierent choices of h lead to dierent shapes of
the prospect theoretical value function in the negative
quadrant.
The expression Uc(Ai, Aj) represents the parcel of the
contribution of criterion c to function d(Ai, Aj), when com-
paring alternative i with alternative j. If the value of
Pic  Pjc is positive, it will represent a gain for the function
d(Ai, Aj) and, therefore the expression Uc(Ai, Aj) will be
used, corresponding, that is, to Eq. (2). If Pic  Pjc is nil,
the value zero will be assigned to Uc(Ai, Aj), by applying
Eq. (3). If Pic  Pjc is negative, Uc(Ai, Aj) will be repre-
sented by Eq. (4). The construction of function Uc(Ai, Aj)
in fact permits an adjustment of the data of the problem
to the value function of Prospect Theory, thus explaining
the aversion and the propensity to risk. This function has
the shape of an S, represented in Fig. 1. Above the hor-
izontal axis, considered as a reference for this analysis,
there is a concave curve representing the gains, and, below
the horizontal axis, there is a convex curve representing the
losses. The concave part reects the aversion to risk in
the face of gains and the convex part, in turn, symbolizes
the propensity to risk when dealing with losses.
After the diverse partial matrices of dominance have
been calculated, one for each criterion, the nal dominance
matrix of the general element d(Ai, Aj) is obtained, through
the sum of the elements of the diverse matrices.
Expression (2) is used to determine the overall value of
alternative i through normalization of the corresponding
1
dominance measurements. The rank of every alternative
originates from the ordering of their respective values.

When:
Value
 s
 wrc P ic P jc
 Pm if P ic  P jc > 0; 2
 wrc

 c1

Uc Ai ; Aj  v if P ic  P jc 0;
 0 3
 u m 
 u P
 t wrc P jc P ic
 1
h c1
wrc
if P ic  P jc < 0; 4
Losses Gains

Table 1
Matrix of normalized alternatives scores against criteria
Alternatives Criteria
C1 C2 ... Cj ... Cm
A1 P11 P12 ... P1j ... P1 m
A2 P21 P22 ... P2j ... P2 m
... ... ... ... ... ...
Ai Pi1 Pi2 ... Pij ... Pim
... ... ... ... ... ...
An Pn1 Pn2 ... Pnj ... Pnm
Fig. 1. Value function of the TODIM method (Gomes and Lima, 1992a).
 L.F. Autran Monteiro Gomes, L.A. Duncan Rangel / European Journal of Operational Research 193 (2009) 204211 207
Pn Pn
j1 dAi ; Aj  min j1 dAi ; Aj
Table 2
ni P n P n : 2 Valuation of criterion C1 location
max j1 dAi ; Aj  min j1 dAi ; Aj
Location Associated score
Therefore, the global measures obtained computed by (2) Periphery 1
permit the complete rank ordering of all alternatives. A Periphery/Average location 2
sensitivity analysis should then be applied to verify the sta- Average location 3
bility of the results based on the decision makers prefer- Good location 4
Excellent location 5
ences. The sensitivity analysis should therefore be carried
out on h as well as on the criteria weights, the choice of
the reference criterion, and performance evaluations. dened as presented in Table 3. Considering a property
which has been constructed to a high standard of nish-
3. Case study ing, the property receives a score equal to 3, the maximum
value for this evaluation criterion.
The city of Volta Redonda is situated in the South of the C4 State of conservation: This is a qualitative criterion
State of Rio de Janeiro, Brazil. It has approximately used to evaluate the general state of the property. This cri-
256,000 inhabitants and there are currently a large number terion considers whether any work has been carried out on
of properties, residential and commercial, rented or avail- the property, as well as habitation conditions. Table 4, as
able for rent. follows, presents the associated scores for the state of con-
The study sought to determine a reference value for the servation of the property. For example, an apartment t
rent of residential properties, serving in this way as an for habitation, needing minor repairs, in other words in
important source of information for landlords and real an average state of conservation, receives a score equal
estate agents. A set of 6 alternatives with known rental val- to 2. This criterion is not directly related to criterion C3,
ues was used as a guideline. Computations in this case as the state of conservation is independent of the standard
study were performed using an Excel-based spreadsheet. of nishing of the property. A property might have a high
Commercial software for the calculations of the TODIM standard of nishing, using high quality material, but be in
method is currently under development, though. In order need of repairs because of its age.
to evaluate the properties, it was necessary to identify C5 Number of Garage spaces: This is a quantitative
which criteria should be considered in the study. For this criterion much valued by people who need to rent a prop-
purpose, research was carried out together with several real erty and have one or more cars.
estate companies in the city of Volta Redonda and inter- C6 Number of rooms: This is a quantitative criterion
views conducted with specialists in the eld of property which considers for valuation the number of rooms in the
evaluations. property: living rooms, bedrooms, kitchen/breakfast area
and bathrooms. The dierence between this criterion and
3.1. Denition of the criteria criterion C2, which deals with the area constructed, should
be highlighted. It is important to evaluate the property by
Based on the points of view expressed in the interviews the number of rooms, as two properties of the same total
with realtors, it was concluded that eight criteria should size may be in question, but one of them may have large
be selected for this particular application. All other possi- rooms and the other, a larger number of smaller rooms.
ble criteria would already be reected in these eight criteria, C7 Attractions: This is a qualitative criterion which
given the characteristics of the study area. The eight most considers the existence of leisure areas such as swimming
important evaluation criteria for this analysis were identi-
ed, and are described as follows:
Table 3
C1 Location: This is the most important evaluation Valuation of criterion C3 construction quality
criterion for rental properties. It is a qualitative criterion Construction quality Associated score
which seeks to dene whether the property is in a valued Low standard of nishing 1
location. The scale presented in Table 2 as Associated Average standard of nishing 2
Score was dened to evaluate the performance of the alter- High standard of nishing 3
natives in relation to this criterion. In this way, a property
evaluated as being in a good location, receives a score
equal to 4. Table 4
C2 Constructed area: This is a quantitative criterion Valuation of criterion C4 state of conservation
which describes the size of the property constructed. In this State of conservation Associated score
study, the unit of measurement was square meters (m2). Bad 1
C3 Construction quality: This is a qualitative criterion Average 2
which denes the standard of nishing of the property. Good 3
Very good 4
Three levels of nishing and their respective scores were
208 L.F. Autran Monteiro Gomes, L.A. Duncan Rangel / European Journal of Operational Research 193 (2009) 204211

pools and barbecues among others. It is evaluated accord- Table 7

ing to Table 5. A house with a swimming pool and barbe- Criteria ranks
cue receives 4 points. Criterion Description Assigned Criteria
C8 Security: This is a qualitative criterion used to weights weights
describe the security conditions of the property. Table C1 Localization 5 0.25
6 presents the evaluation of the property according to C2 Constructed area 3 0.15
C3 Quality of construction 2 0.10
this criterion. For example, an apartment in a building C4 State of conservation 4 0.20
with a doorman and security cameras achieved a score C5 Number of garage spaces 1 0.05
of 1. C6 Number of rooms 2 0.10
C7 Attractions 1 0.05
All the criteria dened above are maximization criteria, C8 Security 2 0.10
in other words, the higher the score obtained in the evalu-
ation of the alternatives in relation to each criterion, the
better the performance. A1 A house in an average location, with 290 m2 of con-
structed area, a high standard of nishing, in a good state
3.2. Weighting of the criteria of conservation, with one garage space, 6 rooms, a swim-
ming pool, barbecue and other attractions, without a secu-
In accordance with the importance given to the crite- rity system.
ria used to evaluate the properties in the study, their A2 A house in a good location, with 180 m2 of
respective weights were dened by the decision makers constructed area, an average standard of nishing, in an
through direct valuation and later normalized. The direct average state of conservation, with one garage space, 4
valuation consisted of assigning a number between 1 and rooms, a backyard and terrace without a security system.
5 to each criterion, where 1 would mean least important A3 A house in an average location, with 347 m2 of
and 5 would mean most important. The assignment of constructed area, a low standard of nishing, in an average
weights was performed by the decision makers in this state of conservation, two garage spaces, 5 rooms, a large
example, the realtors. The information is presented in backyard, without a security system.
Table 7. A4 A house in an average location, with 124 m2 of
constructed area, an average standard of nishing, in a
3.3. The alternatives of the decision process good state of conservation, two garage spaces, 5 rooms, a
fruit orchard, a swimming pool and barbecue, without
In this case study, fteen properties in dierent neigh- security system.
borhoods in the city of Volta Redonda were evaluated. A5 A house in an excellent location, with 360 m2 of
The properties and their respective locations have not been constructed area, a high standard of nishing, in a very
identied, as this was not deemed necessary for the pur- good state of conservation, four garage spaces, 9 rooms,
poses of the article. Only the characteristics of the proper- a backyard and manned security boxes in the neighbor-
ties have been shown, designated A1, A2, A3, . . . , A15. The hood streets.
following describes the 15 properties used in the A6 A house located between the periphery and the city
evaluation: center (periphery/average location) with 89 m2 of con-
structed area, an average standard of nishing, in a good
state of conservation, with one garage space, 5 rooms, a
backyard, without a security system.
Table 5
Valuation of criterion C7 attractions
A7 An apartment located in the periphery, with 85 m2
of constructed area, a low standard of nishing, in a bad
Attractions Associated score
state of conservation, one garage space, 4 rooms, a manned
Without attractions 0 entrance hall with security.
Backyard or terrace 1
Barbecue 2
A8 An apartment in an excellent location, with 80 m2
Swimming pool 3 of constructed area, average standard of nishing, good
Swimming pool, barbecue or others 4 state of conservation, with one garage space, 6 rooms,
manned entrance hall with security.
A9 An apartment located between the periphery and
Table 6 the city center (periphery/average location), with 121 m2
Valuation of Criterion C8 Security of constructed area, an average standard of nishing, in a
Security Associated good state of conservation, no garage space, 6 rooms, with-
score out a security system.
No additional security 0 A10 A house located between the periphery and the
Doorman and security cameras in the apartment building. 1 city center (periphery/average location), with 120 m2 of
Houses with manned security boxes in the streets constructed area, a low standard of nishing, in a good
 L.F. Autran Monteiro Gomes, L.A. Duncan Rangel / European Journal of Operational Research 193 (2009) 204211 209

state of conservation, with one garage space, 5 rooms, a Table 9

large backyard, without a security system. Matrix of normalized alternatives scores against criteria
A11 A house in a good location, with 280 m2 of Alternatives Criteria
constructed area, an average standard of nishing, in an C1 C2 C3 C4 C5 C6 C7 C8
average state of conservation, with two garage spaces, 7 A1 0.068 0.103 0.1 0.075 0.045 0.069 0.174 0
rooms, with an additional security system. A2 0.091 0.064 0.067 0.05 0.045 0.046 0.087 0
A12 An apartment located in the periphery, with 90 m2 A3 0.068 0.123 0.033 0.05 0.091 0.057 0.043 0
of constructed area, a low standard of nishing, in a bad A4 0.068 0.044 0.067 0.075 0.091 0.057 0.174 0
A5 0.114 0.127 0.1 0.1 0.182 0.103 0.043 0.143
state of conservation, one garage space, 5 rooms, without A6 0.045 0.031 0.067 0.075 0.045 0.057 0.043 0
additional security. A7 0.023 0.03 0.033 0.025 0.045 0.046 0 0.143
A13 An apartment located in the periphery in an A8 0.114 0.028 0.067 0.075 0.045 0.069 0 0.143
average location, with 160 m2 of constructed area, a high A9 0.045 0.043 0.067 0.075 0 0.069 0 0
standard of nishing, in a good state of conservation, A10 0.045 0.042 0.033 0.075 0.045 0.057 0.043 0
A11 0.091 0.099 0.067 0.05 0.091 0.08 0.13 0.143
two garage spaces, 6 rooms, with additional security A12 0.023 0.032 0.033 0.025 0.045 0.057 0.087 0
features. A13 0.045 0.057 0.1 0.075 0.091 0.069 0.043 0.143
A14 An apartment in a good location, with 320 m2 of A14 0.068 0.113 0.1 0.075 0.091 0.092 0.087 0.143
constructed area, high standard of nishing, in a good state A15 0.091 0.064 0.067 0.1 0.045 0.069 0.043 0.143
of conservation, 2 garage spaces, 8 rooms, with in addition
a security system.
A15 A house in a good location, with 180 m2 of A4) are presented in the Appendix as an example. Similar
constructed area, an average standard of nishing, in a computations would lead to a 15 15 matrix, where the
very good state of conservation, one garage space, 6 rooms, values in the cells would be measurements of dominance.
with in addition a security system. After the implementation of the mathematical formula-
Table 8, containing the Evaluation of Alternatives tion of the TODIM method, the overall values of the
against Criteria, presents the complete evaluation of the alternatives obtained through normalization of the corre-
properties studied in the analysis in relation to the criteria sponding dominance measurements are presented in
selected by the decision makers. Table 10. This table also presents the ordering of each
alternative.
In the case study, the attenuation factor of losses h
has a value equal to 1, which means that the losses will
3.4. Results analysis
contribute with their real value to the global value. In
order to implement the method, it is necessary for these
Among the properties evaluated, some were inserted as
performances to be normalized. The matrix of normalized
references, simply to assist in the analysis, as their rental
performances is then called the Matrix of Normalized
values were already known. These properties are presented
Alternatives Scores against Criteria, presented in Table
in Table 11.
9 below.
In this way, by inserting these properties with known
In order to demonstrate how to determine the domi-
values, it is possible to establish a range of values for the
nance measurements, the computations to obtain d(A2,
other properties under analysis. For example, in this study,
it can be seen that in the nal ordering by the TODIM
Table 8
Evaluation of alternatives against Criteria
Table 10
Alternatives Criteria Final values and ordering
C1 C2 C3 C4 C5 C6 C7 C8 Alternative Normalized global value Ordering
A1 3 290 3 3 1 6 4 0 A1 0.6916 5
A2 4 180 2 2 1 4 2 0 A2 0.3862 10
A3 3 347 1 2 2 5 1 0 A3 0.3992 9
A4 3 124 2 3 2 5 4 0 A4 0.6210 7
A5 5 360 3 4 4 9 1 1 A5 1.0000 1
A6 2 89 2 3 1 5 1 0 A6 0.2860 11
A7 1 85 1 1 1 4 0 1 A7 0.0000 15
A8 5 80 2 3 1 6 0 1 A8 0.4407 8
A9 2 121 2 3 0 6 0 0 A9 0.0202 14
A10 2 120 1 3 1 5 1 0 A10 0.2127 12
A11 4 280 2 2 2 7 3 1 A11 0.8576 3
A12 1 90 1 1 1 5 2 0 A12 0.1073 13
A13 2 160 3 3 2 6 1 1 A13 0.7188 4
A14 3 320 3 3 2 8 2 1 A14 0.9372 2
A15 4 180 2 4 1 6 1 1 A15 0.6733 6
210 L.F. Autran Monteiro Gomes, L.A. Duncan Rangel / European Journal of Operational Research 193 (2009) 204211

Table 11 out, the value used for h was 1. In the sensitivity analysis
Properties with a previously dened rental value the value of h was altered from 1 to 5. When this alteration
Property Monthly rental value was carried out, the only change in the ordering of the val-
A3 US$ 214 ues occurred in the values of A13 with A15, indicating that,
A4 US$ 309 in spite of the alteration in the value of the attenuation
A5 US$ 712 index of losses, the ordering obtained was consistent. In
A9 US$ 133
A10 US$ 166
this particular application the decision makers felt that sen-
A11 US$ 414 sitivity analyses should be conducted on the weight of the
reference criterion and the value of h only.

method, A8 is in the 8th place, A3 is in the 9th place, with a
rental value of US$ 214, and A4 is in the 7th place, and
should be rented for US$ 309. It can then be said that A8
must be rented for a value between US$ 214 and US$
309. In the same way it can be seen that property A14 is
in the 2nd place. A5 is in the 1st place, with a rental value
of US$ 712, and A11 is in the 3rd place with a rental value
of US$ 414. Therefore property A14 must be rented for a
value of between US$ 712 and US$ 414. If the ranking
order obtained by TODIM did not coincide with the rank-
ing based on dollar values this would mean that the prop-
erties dollar values would have to be reconsidered and
then changed accordingly.
These value intervals are dened for each alternative
under analysis, serving as a reference to obtain values
for the rent. In this way, the decision process becomes less
complex. Table 12 suggests the appropriate intervals for
the properties with non-dened rental values. This shows
that realtors would considerably benet from using a
more comprehensive, multicriteria approach through the
use of TODIM when they assign dollar values to the
properties.
3.5. Sensitivity analysis
After obtaining the results through the implementation
of the TODIM method, a sensitivity analysis was carried
out varying the weighting given to the criterion of greatest
importance to the decision makers, which is criterion C1.
When its weighting was reduced from 5 to 3 there was no
variation in the ranking of the 15 alternatives. Another
analysis was carried out varying the value of h, the attenu-
ation factor of losses. In the rst implementation carried
Table 12
Suggested rental values of the alternatives analyzed
Property Ordering Monthly rental value
A1 5 Between US$ 414 and
A2 10 Between US$ 214 and
A6 11 Between US$ 214 and
A7 15 Less than US$ 133
A8 8 Between US$ 309 and
A12 13 Between US$ 166 and
A13 4 Between US$ 414 and
A14 2 Between US$ 712 and
A15 6 Between US$ 414 and
4. Conclusion
The analysis of the alternatives using the TODIM
method led to an ordering which showed it to be satisfac-
tory and in agreement with the expectations of the special-
ists. Through its formulation it became easier to resolve
conicts between criteria, as, sometimes, in order to
achieve a good performance in a determined criterion of
the analysis, it is necessary not to be concerned about per-
formance in another (Belton and Stewart, 2002).
In the case of property evaluation, the method is capable
of assisting professionals in the real estate market to eval-
uate the alternatives more clearly in relation to the criteria
dened by the specialists.
In this study it was also possible to identify that three
properties, A1, A13 and A15, fell into the same range estab-
lished by the alternatives A4 and A11. From Table 10, it can
be seen that the order of these three properties is: A13, A1
and A15. In this way, the rental values of these three prop-
erties could be the same or, alternatively, giving a reference
for the rental value of the property according to the order-
ing supplied by the method, the greatest value attributed to
A13 and the lowest value to A15.
Thus, the analysis and the solution of the problem pre-
sented here, by means of the TODIM multicriteria method,
reected in their results the preferences of the decision
agents, experts in the multiple dimensions of the problem
analyzed. Consequently, it can be concluded that the
method constitutes ecient support for the evaluation of
property. As new properties are included in the portfolio
of a realtor, the TODIM method must be run again taking
into account the characteristics of these new properties.
After the rank ordering is obtained for these new properties
their suggested rental values will be determined with the
help of Table 11.
Realtors concluded that applying the TODIM method
to the rental evaluation of residential properties can pro-
vide a considerable help to them, given the extreme dicul-
ties in assigning dollar values to all evaluation criteria.
US$ 309 Given new evaluation scenarios, with a new set of evalua-
US$ 166 tion criteria, however, new applications of the multicriteria
US$ 166
analysis would have to be performed. Changes in the sce-
US$ 214 narios can lead to changes in estimated rental values even
US$ 133 for properties whose rental values have previously been
US$ 309 dened. For future studies eorts should also be focused
US$ 414 on trying to quantify the monetary consequences associ-
US$ 309
ated to every criterion.
 L.F. Autran Monteiro Gomes, L.A. Duncan Rangel / European Journal of Operational Research 193 (2009) 204211 211

Acknowledgements By applying Eq. (1) one determines the dominance mea-

The authors are grateful to the referees for their insight-
ful comments on the rst version of this paper. They are
also grateful to the National Council for Scientic and
Technological Development (CNPq) of Brazil for support-
ing the research.
Appendix
Eq. (1) is used to determine the values of the dominance
measurements. For instance, when determining d(A2, A4)
one must rst obtain the dierent values of Uc(A2,
A4) for all criteria c. This is accomplished by making use
of Eqs. (2)(4). The computations below are performed
for: h = 1; r = C1 (the reference criterion); data in Tables
9 and 7.
For c = C1 one gets P21  P41 > 0 (a gain). By using Eq.
(2), with wrc = 1.0, U1(A2, A4) = 0.075, i.e.
v r Sciences 6, 293302.
u
uwrc P ic  P jc w11 P 21  P 41
u P
t m
4
wrc
c1
r Gomes, L.F.A.M., Lima, M.M.P.P., 1992b. From modeling indi-
0:25=0:250:091  0:068
4 A look at Prospect Theory and the additive dierence model.
0:075:
For c = C2 one gets P22  P42 > 0 (a gain). By using Eq.
(2), with wrc = 0.6, U2 (A2, A4) = 0.054.
For c = C3 one gets P23  P43 = 0 (neither a gain nor a
loss). By using Eq. (3), with wrc = 0.4, U3(A2, A4) = 0.0.
For c = C4 one gets P24  P44 < 0 (a loss). By using Eq.
(4), with wrc = 0.8, U4(A2, A4) = 0.353, i.e.
v Cambridge.
u P
u m s
u wrc P jc  P ic
1 t c1 1 4P 44  P 24
h wrc h w14
s Roy, B., Bouyssou, D., 1993. Aide multicritere a la decsion: Methodes et
1 40:075  0:050
1 0:20=0:25
0:353:
For c = C5 one gets P25  P45 < 0 (a loss). By using Eq.
(4), with wrc = 0.2, U5(A2, A4) = 0.959.
For c = C6 one gets P26  P46 < 0 (a loss). By using Eq.
(4), with wrc = 0.4, U6(A2 ,A4) = 0.331.
For c = C7 one gets P27  P47 < 0 (a loss). By using Eq.
(4), with wrc = 0.2, U7(A2, A4) = 1.319.
For c = C8 one gets P28  P48 = 0 (neither a gain nor a
loss). By using Eq. (3), with wrc = 0.4, U8(A2, A4) = 0.0.
surement d(A2, A4) as equal to 2.833.
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