INVEX: Investment Advisory Expert System

Abstract

Abstract: Capital investment is a very important business decision, because it is largely irreversible and usually long‐term. We believe that the use of expert systems as a decision aid for interactive investment decision‐making offers several advantages to an unassisted human decision‐maker, or even to the human/conventional‐DSS combination. For example, the expert system could capture valuable information about so called ‘hard data’, and about the attitude towards some drastic changes in the environment, that are not easy to include in any quantitative method. However, if one expert can play a very important role in the decision‐making process, perhaps different experts can be even more valuable, bringing different approaches and somewhat different sets of information to a decision‐making situation. Our multiparadigm blackboard framework, called BEST (Blackboard‐based Expert Systems Toolkit), allows its user to combine knowledge coming from different experts, and to use different methods/paradigms to capture that knowledge, according to the type of partial problem at hand where each knowledge source is a single paradigm program. In investment decision‐making, judgmental investment ranking and selection from expert economists, embedded in a rule‐based knowledge source, might be combined with decisions from operational research methods (embedded in a knowledge source that fully respects multicriteria optimization paradigm) and from risk analysis method (embedded in a conventional, procedural knowledge source). When the decisions being combined come from different types of knowledge sources, redundancy is likely to be reduced and the combined decision is likely to be more objective.