1. Home
  2. Issues
  3. Volume 30, Issue 2 (2019)
  4. An Extended TODIM Based on Cumulative Pr ...

Informatica


An Extended TODIM Based on Cumulative Prospect Theory and Its Application in Venture Capital
Volume 30, Issue 2 (2019), pp. 413–429
Pub. online: 1 January 2019      Type: Research Article      Open accessOpen Access
Received
1 June 2018
Accepted
1 January 2019
Published
1 January 2019

Abstract

An extended TODIM is proposed in this paper to comprehensively reflect the psychological characteristics of decision makers (DMs) according to cumulative prospect theory (CPT). We replace the original weight with the weighting function of CPT and modify the perceived value of the dominance based on CPT, because the general psychological phenomena of DMs explained in CPT are verified by many experiments and recognized by researchers. Hence, the extended TODIM not only integrates the advantages of CPT in considering the psychological factors of DMs but also retains the superiority of the classical TODIM in relative dominance. Finally, the extended TODIM is demonstrated to capture the psychological factors of DMs well from the case study.

References

 
Abdellaoui, M. (2000). Parameter-free elicitation of utility and probability weighting functions. Management Science, 46(11), 1497–1512.
 
Abdellaoui, M., Bleichrodt, H., Paraschiv, C. (2007). Loss aversion under prospect theory: a parameter-free measurement. Management Science, 53(10), 1659–1674.
 
Birnbaum, M.H. (2005). Three new tests of independence that differentiate models of risky decision making. Management Science, 51(9), 1346–1358.
 
Brans, J.P. (1982). L’ingéničrie de la décision; Elaboration d’instruments d’aide ą la décision. La méthode PROMETHEE. In: Nadeau, R., Landry, M. (Eds.), L’aide ą la décision: Nature, Instruments et Perspectives d’Avenir, Que ‘bec, Presses de l’Universite’ Laval, Canada, pp. 183–214.
 
Brans, J.P., Vincke, P.H. (1985). A preference ranking organization method. Management Science, 31(6), 647–656.
 
Brauers, W.K.M., Zavadskas, E.K. (2010). Project management by MULTIMOORA as an instrument for transition economies. Technological and Economic Development of Economy, 16(1), 5–24.
 
Dhochak, M., Sharma, A.K. (2015). Venture capitalists’ investment decision criteria for new ventures: a review. Procedia-Social and Behavioral Sciences, 189, 465–470.
 
Geng, Y.S., Liu, P.D., Teng, F., Liu, Z.M. (2017). Pythagorean fuzzy uncertain linguistic TODIM method and their application to multiple criteria group decision making. Journal of Intelligent and Fuzzy Systems, 33(6), 3383–3395.
 
Gomes, L.F.A.M., Lima, M.M.P.P. (1991). TODIM: basic and application to multicriteria ranking of projects with environmental impacts. Foundations of Computing and Decision Sciences, 16(4), 113–127.
 
Gomes, L.F.A.M., Rangel, L.A.D. (2009). An application of the TODIM method to the multicriteria rental evaluation of residential properties. European Journal of Operational Research, 193(1), 204–211.
 
Gonzalez, R., Wu, G. (1999). On the shape of the probability weighting function. Cognitive Psychology, 38(1), 129–166.
 
Hu, J.H., Yang, Y., Chen, X.H. (2017). A novel TODIM method-based three-way decision model for medical treatment selection. International Journal of Fuzzy Systems, 6, 1–16.
 
Hwang, C.L., Yoon, K.P. (1981). Multiple Attribute Decision Making: Methods and Applications. Springer-Verlag, New York.
 
Ji, P., Zhang, H.Y., Wang, J.Q. (2018). A projection-based TODIM method under multi-valued neutrosophic environments and its application in personnel selection. Neural Computing and Applications, 29(1), 221–234.
 
Keshavarz Ghorabaee, M., Zavadskas, E.K., Olfat, L., Turskis, Z. (2015). Multi-criteria inventory classification using a new method of evaluation based on distance from average solution (EDAS). Informatica, 26(3), 435–451.
 
Krohling, R.A., Pacheco, A.G.G. (2014). Interval-valued intuitionistic fuzzy TODIM. Procedia Computer Science, 31, 236–244.
 
Krohling, R.A., Pacheco, A.G.G., Siviero, A.L.T. (2013). IF-TODIM: an intuitionistic fuzzy TODIM to multi-criteria decision making. Knowledge-Based Systems, 53(9), 142–146.
 
Llamazares, B. (2018). An analysis of the generalized TODIM method. European Journal of Operational Research, 269(3), 1041–1049.
 
Liao, H.C., Xu, Z.S., Herrera-Viedma, E., Herrera, F. (2018). Hesitant fuzzy linguistic term set and its application in decision making: a state-of-the-art survey. International Journal of Fuzzy Systems, 20(7), 2084–2110.
 
Liu, P.D., Teng, F. (2015). An extended TODIM method for multiple attribute group decision making based on intuitionistic uncertain linguistic variables. Journal of Intelligent and Fuzzy Systems, 29(2), 701–711.
 
Liu, P.D., Teng, F. (2016). An extended TODIM method for multiple attribute group decision-making based on 2-dimension uncertain linguistic variable. Complexity, 21(5), 20–30.
 
Liu, Y.T., Dong, Y.C., Liang, H.M., Chiclana, F., Herrera-Viedma, E. (2018). Multiple attribute strategic weight manipulation with minimum cost in a group decision making context with interval attribute weights information. IEEE Transactions on Systems, Man, and Cybernetics: Systems. https://doi.org/10.1109/TSMC.2018.2874942.
 
Lourenzutti, R., Krohling, R.A. (2013). A study of TODIM in a intuitionistic fuzzy and random environment. Expert Systems with Applications, 40(16), 6459–6468.
 
Mattos, F., Garcia, P. (2011). Applications of behavioral finance to entrepreneurs and venture capitalists: decision making under risk and uncertainty in futures and options markets. In: Advances in Entrepreneurial Finance. Springer, New York, pp. 191–205.
 
Morente-Molinera, J.A., Kou, G., Pang, C., Cabrerizo, J., Herrera-Viedma, E. (2019). An automatic procedure to create fuzzy ontologies from users’ opinions using sentiment analysis procedures and multi-granular fuzzy linguistic modelling methods. Information Sciences, 476, 222–238.
 
Nunes, J.C., Felix, E.G.S., Pires, C.P. (2014). Which criteria matter most in the evaluation of venture capital investments? Journal of Small Business and Enterprise Development, 21(3), 505–527.
 
Opricovic, S. (1998). Multi-Criteria Optimization of Civil Engineering Systes. Faculty of Civil Engineering, Belgrade.
 
Paelinck, J.H.P. (1978). Qualiflex: a flexible multiple-criteria method. Economics Letters, 1(3), 193–197.
 
Qin, Q.D., Liang, F.Q., Li, L., Chen, Y.W., Yu, G.F. (2017). A TODIM-based multi-criteria group decision making with triangular intuitionistic fuzzy numbers. Applied Soft Computing, 55, 93–107.
 
Ren, Z.L., Xu, Z.S., Wang, H. (2017). An extended TODIM method under probabilistic dual hesitant fuzzy information and its application on enterprise strategic assessment. In: IEEE International Conference on Industrial Engineering and Engineering Management. IEEE, pp. 1464–1468.
 
Rezaei, A. (2015). Best-worst multi-criteria decision-making method. Omega, 53, 59–57.
 
Roy, B. (1968). Classement et choix en présence de points de vue multiples (la methode ELECTRE). Revue Francaise D Informatique de Recherche Operationnelle, 2(8), 57–75.
 
Sang, X.Z., Liu, X.W. (2016). An interval type-2 fuzzy sets-based TODIM method and its application to green supplier selection. Journal of the Operational Research Society, 67(5), 722–734.
 
Srinivasan, V., Shocker, A.D. (1973). Linear programming techniques for multidimensional analysis of preference. Psychometrika, 38(3), 337–342.
 
Tan, C.Q., Jiang, Z.Z., Chen, X.H. (2015). An extended TODIM method for hesitant fuzzy interactive multicriteria decision making based on generalized Choquet integral. Journal of Intelligent and Fuzzy Systems, 29(1), 293–305.
 
Tversky, A., Kahneman, D. (1992). Advances in prospect theory: cumulative representation of uncertainty. Journal of Risk and Uncertainty, 5(4), 297–323.
 
Wang, S.W., Liu, J. (2017). Extension of the TODIM method to intuitionistic linguistic multiple attribute decision making. Symmetry, 9(6), 95.
 
Wang, J., Wang, J.Q., Zhang, H.Y. (2016). A likelihood-based TODIM approach based on multi-hesitant fuzzy linguistic information for evaluation in logistics outsourcing. Computers and Industrial Engineering, 99(C), 287–299.
 
Wei, C.P., Ren, Z.L., Rodríguez, R.M. (2015). A hesitant fuzzy linguistic TODIM method based on a score function. International Journal of Computational Intelligence Systems, 8(4), 701–712.
 
Widyanto, H.A., Dalimunthe, Z. (2015). Evaluation Criteria of Venture Capital Firms Investing on Indonesians’ SME. Social Science Electronic Publishing, New York.
 
Wu, G., Gonzalez, R. (1999). Nonlinear decision weights in choice under uncertainty. Management Science, 45(45), 74–85.
 
Yu, W.Y., Zhang, Z., Zhong, Q.Y., Sun, L.L. (2017). Extended TODIM for multi-criteria group decision making based on unbalanced hesitant fuzzy linguistic term sets. Computers and Industrial Engineering, 114, 316–328.
 
Yu, S.M., Wang, J., Wang, J.Q. (2018). An extended TODIM approach with intuitionistic linguistic numbers. International Transactions in Operational Research, 25(3), 781–805.
 
Zavadskas, E.K., Turskis, Z. (2010). A new additive ratio assessment (ARAS) method in multicriteria decision-making. Technological and Economic Development of Economy, 16(2), 159–172.
 
Zavadskas, E.K., Kaklauskas, A., Sarka, V. (1994). The new method of multi-criteria complex proportional assessment of projects. Technological and Economic Development of Economy, 3, 131–139.
 
Zhang, X.L. (2017). A closeness index-based TODIM method for hesitant qualitative group decision making. Informatica, 28(3), 565–581.
 
Zhang, X.L., Xu, Z.S. (2014). The TODIM analysis approach based on novel measured functions under hesitant fuzzy environment. Knowledge-Based Systems, 61(2), 48–58.
 
Zhang, Y.X., Xu, Z.S. (2016). Efficiency evaluation of sustainable water management using the HF-TODIM method. International Transactions in Operational Research. https://doi.org/10.1111/itor.12318.
 
Zhang, W.K., Du, J., Tian, X.L. (2018). Finding a promising venture capital project with TODIM under probabilistic hesitant fuzzy circumstance. Technological and Economic Development of Economy, 24(5), 2026–2044.
 
Zhang, L., Zhan, J.M., Xu, Z.S. (2019). Covering-based generalized IF rough sets with applications to multi-attribute decision-making. Information Sciences, 478, 275–302.
 
Zindani, D., Maity, S.R., Bhowmik, S., Chakraborty, S. (2017). A material selection approach using the TODIM (TOmada de Decisao Interativa Multicriterio) method and its analysis. International Journal of Materials Research, 108(5), 345–354.

Biographies

Tian Xiaoli
tianxiaolitxl@126.com

X. Tian is carrying out the PhD degree in Business School, Sichuan University. She received her master’s degree in School of Economics, Sichuan University, China, in 2012. Currently, she has contributed articles to professional journals including Applied Soft Computing, Knowledge-Based Systems, Technological and Economic Development of Economy, etc. Her research interests include decision making with bounded rationality, uncertain multi-criteria decision making, consensus model, etc.

Xu Zeshui
xuzeshui@263.net

Z. Xu received the PhD degree in management science and engineering from Southeast University, Nanjing, China, in 2003. From April 2003 to May 2005, he was a postdoctoral researcher at the School of Economics and Management, Southeast University. From October 2005 to December 2007, he was a postdoctoral researcher at the School of Economics and Management, Tsinghua University, Beijing, China. He is a Distinguished Young Scholar of the National Natural Science Foundation of China and the Chang Jiang Scholars of the Ministry of Education of China. He is currently a professor at the Business School, Sichuan University, Chengdu. He has been elected to the grade of Fellow of IEEE (Institute of Electrical and Electronics Engineers) and IFSA (International Fuzzy Systems Association), selected as the Thomson Reuters Highly Cited Researcher (in the fields of Computer Science and Engineering, respectively). His h-index is 109, and he has authored twelve books published by Springer. He has contributed more than 680 journal articles to professional journals. His current research interests include information fusion, group decision making, computing with words, and aggregation operators. Dr. Xu is the associate editor of IEEE Transactions on Fuzzy Systems, Information Sciences, Fuzzy Optimization and Decision Making, International Journal of Fuzzy Systems, International Journal Machine Leaning and Cybernetics, etc. He is also a member of the editorial (advisory) boards of Knowledge-Based Systems, Information Fusion, Applied Intelligence, Technological and Economic Development of Economy, etc.

Gu Jing
gj0901@scu.edu.cn

J. Gu received the PhD degree in school of management and economics from University of Electronic Science and Technology of China, Chengdu, China, in 2009. She is currently an associate professor of Economics School in Sichuan University. She has published over 30 journal articles and authored two monographs. She was also awarded as Distinguished Youth of Sichuan Province and Elite Youth Faculties of Sichuan University. Her research interest focuses on decision making and risk analysis.


Full article Related articles Cited by PDF XML
Full article Related articles Cited by PDF XML

Copyright
© 2019 Vilnius University
Open access article under the CC BY license.

Keywords
multi-attributes decision-making TODIM cumulative prospect theory venture capital

Metrics
since January 2020
1595

Article info
views

767

Full article
views

831

PDF
downloads

240

XML
downloads


Share


RSS