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An improved fuzzy decision analysis framework with fuzzy Mahalanobis distances for individual investment effect appraisal

Shang-Yu Chen (College of Management, National Taipei University of Technology, Taipei, Taiwan)

Management Decision

ISSN: 0025-1747

Article publication date: 19 June 2017

Abstract

Purpose

Due to such issues as the recent economic recession, low salaries, and an aging society, how people can strengthen their investment performance when managing their personal financial affairs is a critical consideration. The purpose of this paper is to consider the assessment of the performance of individual investment policies and to present an evaluation framework for measuring the degree of workability of investment policies.

Design/methodology/approach

The proposed evaluation framework combines the fuzzy analytical hierarchy process and the improved fuzzy technique for order preference by similarity to the ideal solution to measure the efficiency scores of the alternatives (i.e. investment policies) under assessment.

Findings

This quantitative framework is formed from the criteria of investment return, taxation, risk, and individual circumstances according to prudent evaluation of private wealth management research, and is applied to appraise the investment performance of individuals in Taiwan. The findings indicate that investment performance, risks, and the investment of mutual funds are the most preferred conditions and investment policy for investors, and can offer some effective suggestions for investors as well as for future academic research.

Originality/value

The efficiency scores are computed based on the fuzzy Mahalanobis distances, taking into account the fuzzy correlations among experts’ criteria. The advantage of adopting the fuzzy Mahalanobis distances over the fuzzy Euclidean distances, which are typically computed in the literature, is that the undulation of the efficiency scores can be reduced.

Keywords

Citation

Chen, S.-Y. (2017), "An improved fuzzy decision analysis framework with fuzzy Mahalanobis distances for individual investment effect appraisal", Management Decision, Vol. 55 No. 5, pp. 935-956. https://doi.org/10.1108/MD-11-2015-0512

Publisher

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Emerald Publishing Limited

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