Authors:
Rumiko Azuma
1
and
Shinya Nozaki
2
Affiliations:
1
Aoyama Gakuin University, Japan
;
2
University of the Ryukyus, Japan
Keyword(s):
Decision-making Model, Analytic Hierarchy Process, Risk Evaluation, Prospect Theory.
Related
Ontology
Subjects/Areas/Topics:
Artificial Intelligence
;
Biomedical Engineering
;
Expert Systems
;
Health Information Systems
;
Knowledge Engineering and Ontology Development
;
Knowledge-Based Systems
;
Symbolic Systems
Abstract:
The Analytic Hierarchy Process (AHP) is a multi-criteria decision-making approach aimed at reflecting a human’s subjective judgment or vagueness. The conventional evaluation in AHP is considered to be a kind of utility. However, there are some cases where the traditional utility theory cannot explain risk aversion. This paper presents a new decision-making methodology for considering risk evaluation. We propose the hierarchy model that contains return and risk categories, and an AHP method that applies prospect theory, which is able to explain people’s decisions when they face situations involving risks. Therefore, by proposing an AHP method that utilizes it, we enable the evaluation of alternatives under return and risk.