An inverse prospect theory-based algorithm in extended incomplete additive probabilistic linguistic preference relation environment and its application in financial products selection

Nana Liu (), Zeshui Xu (), Yue He () and Xiao-Jun Zeng ()
Additional contact information
Nana Liu: Sichuan University
Zeshui Xu: Sichuan University
Yue He: Sichuan University West China Second University Hospital
Xiao-Jun Zeng: The University of Manchester

Fuzzy Optimization and Decision Making, 2021, vol. 20, issue 3, No 6, 397-428

Abstract: Abstract Selecting financial products is one of the most fundamental investment activities to both individuals and companies, and therefore it is very important to establish an efficient and practical method for financial products selection. To address the challenge of the complicated decision-making environment and decision makers’ expression habits for the selection of financial products, this paper develops the incomplete additive probabilistic linguistic preference relation to depict decision makers’ preferences. Considering that, when decision makers express their opinions using probabilistic linguistic preference relation, it is possible that the sum of the value of the probability information is more than 1, this paper also extends the concepts of probabilistic linguistic term set, additive probabilistic linguistic preference relation and incomplete additive probabilistic linguistic preference relation to improve and ensure their practicability. Moreover, an “inverse prospect theory-based” algorithm is proposed to choose proper financial products. The algorithm processes the original incomplete additive probabilistic linguistic preference relation by using the inverse functions of the prospect theory at first. Then, a priority weights deriving model is established based on the extended concepts. Finally, the numerical case and analysis is presented as the evidences to the conclusion that the proposed algorithm is practical and robust.

Keywords: Financial products selection; Extended probabilistic linguistic term set; Extended incomplete additive probabilistic linguistic preference relation; Inverse prospect theory (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10700-020-09348-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:fuzodm:v:20:y:2021:i:3:d:10.1007_s10700-020-09348-3

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10700

DOI: 10.1007/s10700-020-09348-3

Access Statistics for this article

Fuzzy Optimization and Decision Making is currently edited by Shu-Cherng Fang and Boading Liu

More articles in Fuzzy Optimization and Decision Making from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().