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An Improved TOPSIS Model Based on Cumulative Prospect Theory: Application to ESG Performance Evaluation of State-Owned Mining Enterprises

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  • Jiahui Su

    (Department of Economics, University of Southampton, Hampshire SO17 1BJ, UK)

  • Yidi Sun

    (Department of Economics, University of Southampton, Hampshire SO17 1BJ, UK)

Abstract

The aim of this study is to provide a comprehensive decision-making method that can be applied to investment decisions based on the Environmental, Social and Governance (ESG) performance. The study contributes to the existing literature by introducing the CPT-TOPSIS model, a pioneering approach that incorporates the effect of non-rational factors on decision-making results in uncertain conditions by combining cumulative prospect theory (CPT) with the classic TOPSIS model. Moreover, by conducting an application to ESG evaluation on five state-owned mining enterprises in China, the study provides evidence of the effectiveness and improvement offered by the new model in comparison with the classic TOPSISI model and prospect theory TOPSIS (PT-TOPSIS) model. The results suggest that the CPT-TOPSIS model considers risk preferences and probability distortion in the decision-making process, narrows the gap between ESG scores, and makes ESG performance evaluation more realistic.

Suggested Citation

  • Jiahui Su & Yidi Sun, 2023. "An Improved TOPSIS Model Based on Cumulative Prospect Theory: Application to ESG Performance Evaluation of State-Owned Mining Enterprises," Sustainability, MDPI, vol. 15(13), pages 1-20, June.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:13:p:10046-:d:1178854
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    Cited by:

    1. Marwa M. Sleem & Osama Y. Abdelfattah & Amr A. Abohany & Shaymaa E. Sorour, 2024. "A Comprehensive Approach to Biodiesel Blend Selection Using GRA-TOPSIS: A Case Study of Waste Cooking Oils in Egypt," Sustainability, MDPI, vol. 16(14), pages 1-25, July.
    2. Yong Tan & Amir Karbassi Yazdi & Jorge Antunes & Peter Wanke & Angappa Gunasekaran & Henrique Luiz Corrêa & Giuliani Coluccio, 2024. "The Quest for an ESG Country Rank: A Performance Contribution Analysis/MCDM Approach," Mathematics, MDPI, vol. 12(12), pages 1-24, June.

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