The Behavioral TOPSIS Based on Prospect Theory and Regret Theory

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.