Method of risk multiple attribute decision making based on risk-gain ratio and prospect theory
Guo Chuang · Systems engineering and electronics · 2011
Aiming at decision-maker's irrationality is usually disregarded in risk multiple attribute decision making based on expected utility theory,a risk multiple attribute decision making method based on risk-gain ratio and prospect theory is proposed.According to the performance-price ratio in economics,a parameter of the risk-gain ratio is defined and modified by the value function in prospect theory for fully embodying decision-maker's irrationality,and a judgement matrix including project preference is obtained by using a simple weighted method,then the sequence of projects is worked out.As the case shows,the method has a strong operability,and the evaluated result is accordant with the irrationality in decision-making.The method provides a new path for risk multiple attribute decision making.