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The Behavioral TOPSIS Based on Prospect Theory and Regret Theory

Author

Listed:
  • Xinwang Liu

    (School of Economics and Management, Southeast University, Nanjing 210096, Jiangsu, P. R. China)

  • Yuyao Yang

    (��Guanghua School of Management, Peking University, Beijing 100871, P. R. China)

  • Jing Jiang

    (School of Economics and Management, Southeast University, Nanjing 210096, Jiangsu, P. R. China)

Abstract

Technique for order preference by similarity to ideal solution (TOPSIS) is a famous technique for solving multicriteria decision-making problems. However, the classical TOPSIS is invalid to distinguish the alternatives when the distances to the PIS and NIS are the same, and the current researchers about TOPSIS seldom consider the psychological characteristics of loss aversion and regret aversion which affect the decision quality in real world. This paper proposes a behavioral TOPSIS with prospect theory and regret theory considering risk attitudes. First, the defect of classical TOPSIS is illustrated as motivation. Next, we introduce a behavioral TOPSIS with prospect theory and show how it overcomes the defect of classical TOPSIS. Then, regret theory is applied to extend behavioral TOPSIS to show the regret attitude. Finally, a numerical example is used to demonstrate the feasibility and comparative analysis is presented to show the novelty and validity of the proposed method.

Suggested Citation

  • Xinwang Liu & Yuyao Yang & Jing Jiang, 2023. "The Behavioral TOPSIS Based on Prospect Theory and Regret Theory," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 22(05), pages 1591-1615, September.
    • Handle: RePEc:wsi:ijitdm:v:22:y:2023:i:05:n:s0219622022500778
    DOI: 10.1142/S0219622022500778
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