Prospect theory based multi-criteria decision making method

With respect to risk decision making problems, a multi-criteria decision making method based on prospect theory is proposed. This method firstly describes multi-criteria decision making problem. Reference points of criteria are given and the outcomes for criteria are calculated. Then, according to value function and decision weight function, the prospect value of criteria for every alternative is calculated, and the prospect value of alternative is acquired by weighted average method. At last, all the alternatives are sorted and the optimal one is chosen according to the prospect values. Feasibility of the method is demonstrated by a simple illustrative example.