A Multiple Criteria Ranking Method Based on Outranking Relations: An Extension for Prospect Theory

Abstract

In this study, Prospect Theory is integrated into a well-known multiple criteria ranking method, PROMETHEE. PROMETHEE considers the outranking relations among alternatives based on the preference functions. Prospect Theory evaluates the alternatives with a difference function based on gains and losses. The preference functions of PROMETHEE are modified to capture the choice behavior of the decision maker. The proposed method is a generalization of PROMETHEE that can handle the higher loss impact case as well as the usual equal loss and gain impact. The proposed method is compared with PROMETHEE, PT-PROMETHEE that is an extension of PROMETHEE with reference alternative, and the weighted sum method using an exemplary data set and Times Higher Education (THE) World University Ranking 2019 and 2020 data. The results show that rankings of alternatives change significantly when the impact of losses is larger than gains.