Multiple attribute decision making considering aspiration-levels: A method based on prospect theory

In this paper, a method based on prospect theory is proposed to solve the multiple attribute decision making (MADM) problem considering aspiration-levels of attributes, where attribute values and aspiration-levels are represented in two different formats: crisp numbers and interval numbers. According to the idea of prospect theory, aspiration-levels are firstly regarded as the reference points, and the four possible types for comparing an attribute value with an aspiration-level are described. Then, for all possible cases of the four types, the calculation formulae of gains and losses of alternatives concerning attributes are given. By calculating gain and loss of each alternative, a gain matrix and a loss matrix are constructed, respectively. Further, using the value function proposed in prospect theory and the simple additive weighting method, the overall prospect value of each alternative is calculated. Based on the obtained overall prospect values, a ranking of alternatives can be determined. Finally, a numerical example is used to illustrate the use of the proposed method.

► Attribute values and aspiration-levels are represented in two different formats.
► The DM’s psychological behavior is considered by applying prospect theory.
► The calculation formulae of gains and losses for all possible cases are given.
► A complete procedure based on prospect theory is proposed to solve MADM problems.