ON THE SOLUTION OF QUANTITATIVE POLICY ANALYSIS MODELS USING BI-LEVELPROGRAMMING

Quantitative policy analysis may be defined as a process in which poli cy alternatives are generated and evaluated with respect to their achi evement of policy goals. This paper develops a methodology for the mod eling and solution of certain hierarchical decision-making problems. W e consider the case of an upper-level policy-maker and a lower-level s ystem that responds to the policy set by the upper level. The system's reaction to the policy alternative chosen (the behavioral problem) is formulated as a mathematical programming problem. The complete model is formulated as a special class of bi-level program for which a solut ion can be derived using ordinary mathematical programming techniques. In this way, a major difficulty of previous attempts at developing us eful computational procedures for quantitative policy analysis, based on bi-level programming, has been removed. Particular attention is giv en to development of a planning model with respect to the uncertain na ture of policy analysis problems and to the implementation of the mode l within the policy analysis process. Special cases and examples are c onsidered.