Abstract:

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.