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– The purpose of this paper is to provide a new approach to solving the interval-valued intuitionistic fuzzy stochastic multi-criteria decision-making (MCDM) problems.
Abstract
Purpose
The purpose of this paper is to provide a new approach to solving the interval-valued intuitionistic fuzzy stochastic multi-criteria decision-making (MCDM) problems.
Design/methodology/approach
To transform the interval-valued intuitionistic fuzzy number (IVIFN) into a computational numerical value, a new precision score (P-score) function is developed based on the degrees of membership, non-membership and hesitation. The prospect decision-making matrix is derived by applying P-score function and Prospect theory. A new criteria weighting model is put forward based on the least square method, the maximizing deviation method and Prospect theory. Consequently, combined criteria weighting model with the prospect decision-making matrix, the integrated prospect value is derived which presents a measurement scale for ranking the order of alternatives.
Findings
As a result, the method of the interval-valued intuitionistic fuzzy stochastic MCDM is suggested. In this method, the new P-score function responses the comprehensive information of the criteria. The prospect decision-making matrix can reflect the risk attitude of the decision maker. The new criteria weighting model can express both the subjective considerations of the decision maker and the objective information meaning.
Research limitations/implications
The research results may lack generalizability for other fuzzy decision making because of the chosen research approach for IVIFN decision making. Therefore, researchers are encouraged to test the proposed propositions further.
Practical implications
The developed approach can be applied in many decision-making fields such as selection of renewable energy alternatives, assessment of flexible manufacturing system alternatives and human resource alternatives performance evaluation, etc. where the evaluation values are IVIFNs.
Originality/value
This paper succeeds in studying the interval-valued intuitionistic fuzzy MCDM based on Prospect theory, which has not been reported in the existing academic literature.
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Rafał Wolski, Monika Bolek, Jerzy Gajdka, Janusz Brzeszczyński and Ali M. Kutan
This study aims to answer the question whether investment funds managers exhibit behavioural biases in their investment decisions. Furthermore, it investigates if fund managers…
Abstract
Purpose
This study aims to answer the question whether investment funds managers exhibit behavioural biases in their investment decisions. Furthermore, it investigates if fund managers, as a group of institutional investors, make decisions in response to central bank’s communication as well as other information in relation to various behavioural inclinations.
Design/methodology/approach
A comprehensive study was conducted based on a questionnaire, which is composed of three main parts exploring: (1) general information about the funds under the management of the surveyed group of fund managers, (2) factors that influence the investment process with an emphasis on the National Bank of Poland communication and (3) behavioural inclinations of the surveyed group. Cronbach’s alpha statistic was applied for measuring the reliability of the survey questionnaire and then chi-squared test was used to investigate the relationships between the answers provided in the survey.
Findings
The central bank’s communication matters for investors, but its impact on their decisions appears to be only moderate. Interest rates were found to be the most important announcements for investment fund managers. The stock market was the most popular market segment where the investments were made. The ultra-short time horizon played no, or only small, role in the surveyed fund managers’ decisions as most of them invested in a longer horizon covering 1 to 5 years. Moreover, most respondents declared that they considered in their decisions the information about market expectations published in the media. Finally, majority of the fund managers manifested limited rationality and were subject to behavioural biases, but the decisions and behavioural inclinations were independent and, in most cases, they did not influence each other.
Practical implications
The results reported in this study can be used in practice to better understand and to improve the fund managers’ decision-making processes.
Originality/value
Apart from the commonly tested behavioural biases in the group of institutional investors in the existing literature, such as loss aversion, disposition effect or overconfidence, this paper also focuses on the less intensively analysed behavioural inclinations, i.e. framing, illusion of the control, representativeness, sunk cost effect and fast thinking. The originality of this study further lies in the way the research was conducted through interviews with fund managers, who were found to be subject to behavioural biases, although those behavioural inclinations did not influence their investment decisions. This finding indicates that professionalism and collectivism in the group of institutional investors protect them from irrationality.
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Gregory Gadzinski, Markus Schuller and Shabnam Mousavi
Behavioral solutions to our cognitive biases have long been studied in the literature. However, there is still ample evidence of behavioral biases in decision-making, with only…
Abstract
Purpose
Behavioral solutions to our cognitive biases have long been studied in the literature. However, there is still ample evidence of behavioral biases in decision-making, with only limited improvement in the medium/long term even when debiasing methods are applied. The purpose of this paper is to describe how financial investors could benefit from a proactive management of emotions combined with a set of learning and decision-making heuristics to make more efficient investments in the long run.
Design/methodology/approach
First, the authors offer a classification of the appropriate quantitative and qualitative methodologies to use in different ecological environments. Then, the authors offer a list of detailed heuristics to be implemented as behavioral principles intended to induce more long-lasting changes than the original rules offered by the adaptive toolbox literature. Finally, the authors provide guidelines on how to embed artificial intelligence and cognitive diversity within the investment decision architecture.
Findings
Improvements in decision skills involve changes that rarely succeed through a single event but through a succession of steps that must be habitualized. This paper argues that implementing a more conscious set of personal and group principles is necessary for long-lasting changes and provides guidelines on how to minimize systematic errors with adaptive heuristics. To maximize their positive effects, the principles outlined in this paper should be embedded in an architecture that fosters cognitively diverse teams. Moreover, when using artificial intelligence, the authors advise to maximize the interpretability/accuracy ratio in building decision support systems.
Originality/value
The paper proposes a theoretical reflection on the field of behavioral research and decision-making in finance, where the chief goal is to offer practical advices to investors. The literature on debiasing cognitive biases is limited to the detection and correction of immediate effects. The authors go beyond the traditional three building blocks developed by the behavioral finance literature (search rules, stopping rules and decision rules) and aim at helping investors who are interested in finding long-term solutions to their cognitive biases.
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Qingsheng LI and Ni Zhao
The purpose of this paper is to deal with interval grey-stochastic multi-attribute decision-making problems. It proposes a VIKOR method based on prospect theory in which…
Abstract
Purpose
The purpose of this paper is to deal with interval grey-stochastic multi-attribute decision-making problems. It proposes a VIKOR method based on prospect theory in which probabilities and the attribute value are both grey numbers.
Design/methodology/approach
In the prospect theory the results values and probability weight are used while the utility and probability values in the expected utility theory, which the more realistically reflect and describe the decision makers on the optimal process. VIKOR method makes the decision acceptable superiority and decision process stability. At the same time, a new interval grey number entropy is put forward, which is used to calculate the index weight of unknown.
Findings
The paper provides a VIKOR method based on prospect theory in which probabilities and the attribute value are both grey numbers. And the validity and feasibility of the method are illustrated by an example.
Research limitations/implications
Although VIKOR is much closer to PIS than TOPSIS, at the same time VIKOR method can get the compromise solution with priority, researchers are encouraged to carry on comparative study further.
Practical implications
The paper includes interval grey-stochastic multi-attribute decision-making method and implications. The validity and feasibility of the method are illustrated by a case.
Originality/value
This paper proposes a VIKOR method based on prospect theory in which probabilities and the attribute value are both interval grey numbers. At the same time, a new interval grey number entropy is put forward, which is used to calculate the index weight of unknown.
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Shuli Yan and Sifeng Liu
With respect to multi-stage group risk decision-making problems in which all the attribute values take the form of grey number, and the weights of stages and decision makers are…
Abstract
Purpose
With respect to multi-stage group risk decision-making problems in which all the attribute values take the form of grey number, and the weights of stages and decision makers are unknown, the purpose of this paper is to propose a new decision-making method based on grey target and prospect theory.
Design/methodology/approach
First, the sequencing and distance between two grey numbers are introduced. Then, a linear operator with the features of the “rewarding good and punishing bad” is presented based on the grey target given by decision maker, and the prospect value function of each attribute based on the zero reference point is defined. Next, weight models of stages and decision makers are suggested, which are based on restriction of stage fluctuation, the maximum differences of alternatives and the maximum entropy theory. Furthermore, the information of alternatives is aggregated by WA operator, the alternatives are selected by their prospect values.
Findings
The comprehensive cumulative prospect values are finally aggregated by WA operator, alternatives are selected or not are judged by the sign of the comprehensive prospect theory, if the prospect value of alternative is negative, the corresponding alternative misses the group decision makers’ grey target, on the contrary, if the prospect value of alternative is positive, the corresponding alternative is dropped into the group decision makers’ grey target, the alternative with positive prospect value whose value is the maximum is selected.
Originality/value
Compared with the traditional decision-making methods using expected utility theory which suppose the decision makers are all completely rational, the proposed method is based on irrational which is more in line with the decision maker’s psychology. And this method considers the decision maker’s psychological expectation values about every attribute, different satisfactory grey target about attributes will directly affect decision-making result.
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Divya Aggarwal, Uday Damodaran, Pitabas Mohanty and D. Israel
This study examines individual ambiguity attitudes alone and in groups by leveraging the descriptive model of anchoring and adjustment on decision-making under ambiguity. The…
Abstract
Purpose
This study examines individual ambiguity attitudes alone and in groups by leveraging the descriptive model of anchoring and adjustment on decision-making under ambiguity. The study extends Ellsberg's probability ambiguity to outcome ambiguity and examines decisions made under both ambiguities, at different likelihood levels and under the domain of gains and losses.
Design/methodology/approach
The methodology selected for this study is a two-stage within-subject lab experiment, with participants from different Indian universities. Each participant made 12 lottery decisions at the individual level and at individuals in the group level.
Findings
The results show that ambiguity attitudes are not universal in nature. Ambiguity seeking as a dominant choice was observed at both the individual level and at individual in the group level. However, the magnitude of ambiguity seeking or ambiguity aversion contingent upon the domain of gains and losses differed widely across the individual level and at individuals in the group level.
Research limitations/implications
The study enables to contribute toward giving a robust descriptive explanation for individual behavior in real-world applications of finance. It aims to provide direction for theoretical normative models to accommodate heterogeneity of ambiguity attitudes.
Originality/value
The study is novel as it examines a two-dimensional approach by representing ambiguity in probability and in outcomes. It also analyzes whether decisions under ambiguity vary when individuals make decisions alone and when they make it in groups.
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Mehdi Rajabi Asadabadi and Keiran Sharpe
The purpose of this paper is to use game theory and ambiguity theory to show how “economically rational” vendors will behave in a procurement process that runs over more than one…
Abstract
Purpose
The purpose of this paper is to use game theory and ambiguity theory to show how “economically rational” vendors will behave in a procurement process that runs over more than one period. In light of that behavior, we have proposed “economically rational” counter-strategies on the part of purchasers.
Design/methodology/approach
Based on a perception–expectation framework, a unique game-based approach is designed. The authors have proposed “economically rational” counter-strategies on the part of purchasers, which are premised on the theory of rational agency.
Findings
Ambiguity in the procurement process is a bane for procuring principals and a boon for suppliers – for the former, it is an issue to be managed, and for the latter it provides an opportunity to extract “insurance rents” from the principals. The authors show that, under certain conditions, the contracting principal can be exploited by a rational, rent-extracting vendor. In particular, they show that there is an incentive for a vendor to delay the resolution of ambiguities in the contract until late in the procurement process, when the insurance rents are at a maximum.
Originality/value
This study contributes to the current literature by highlighting an existing problem in the procurement process and describing it using decision theory under ambiguity in a game-like setting. Specifically, the authors use game theory in a unique way to deal with imperfect information coupled with ambiguity.
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The study aims to show that ambiguity aversion exerts a non-negligible effect on the investors' decisions, especially due to the possibility of sharp declines in stock prices.
Abstract
Purpose
The study aims to show that ambiguity aversion exerts a non-negligible effect on the investors' decisions, especially due to the possibility of sharp declines in stock prices.
Design/methodology/approach
The vast majority of previous studies on life-cycle consumption and asset allocation assume that the equity premium is constant. This study evaluates the impact of rare disasters that shift the stock market to a low return state on investors' consumption and portfolio decisions. The author assumes that investors are averse to ambiguity relative to the current state of the economy and must incur a per period cost to participate in the stock market and solve their optimal consumption and asset allocation problem using dynamic programming.
Findings
The results show that most young investors choose not to invest in stocks because they have low accumulated wealth and the potential return from their stock market investments would not cover the participation costs. Furthermore, ambiguity-averse investors hold considerably fewer stocks throughout their lifetime than ambiguity-neutral ones. The fraction of wealth invested in stocks over the typical consumer's life is hump-shaped: it is low for a young individual, peaks at his early 30s and then decreases until his retirement age.
Originality/value
To the best of the author’s knowledge, this is the first study that assesses the impact of negative stock price jumps on the optimal portfolio of an ambiguity-averse investor.
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Zhihong Li, Yongzhong Sha, Xuping Song, Kehu Yang, Kun ZHao, Zhixin Jiang and Qingxia Zhang
Risk perception is an essential factor affecting how individuals evaluate risk, make decisions and behave. The impact of risk perception on customer purchase behavior has been…
Abstract
Purpose
Risk perception is an essential factor affecting how individuals evaluate risk, make decisions and behave. The impact of risk perception on customer purchase behavior has been widely studied; however, the association has been debated. Therefore, the purpose of this paper is to examine the relationship between risk perception and customer purchase behavior and to examine factors that could moderate it.
Design/methodology/approach
This study conducted a meta-analysis of this relationship and examined factors that could moderate it. Six databases were comprehensively searched. Two reviewers independently selected the studies for inclusion, extracted data and assessed quality. Pearson's r was used as the effect estimate. A total of 33 studies were included in the meta-analysis.
Findings
The results revealed a negative relationship between risk perception and customer purchase behavior. The geographical region, purchase channel and country development level affected the relationship. The correlation between perceived risk and purchase behavior in European consumers was the highest, followed by the correlation in American consumers; the weakest correlation was found in Asian consumers. For consumers in developed countries, perceived risk had a stronger negative influence on customer purchase behavior than that for consumers in developing countries. The perceived risk of online purchase channels had a stronger negative impact on customer purchase behavior than that of offline purchase channels.
Research limitations/implications
Risk perception is a useful context in which to explain barriers to customer purchase behavior. In addition, reducing consumers’ risk perception and perfecting the market transaction process with respect to buying behavior should be further studied.
Originality/value
The findings of this review indicate a direct negative relationship between risk perception and customer purchase behavior. To the best of the authors’ knowledge, this review is the first to meta-analytically summarize the impact of risk perception on customer purchase behavior in social sciences research, and it also illuminates new perspectives for future studies.
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Na Zhang, Haiyan Wang and Zaiwu Gong
Grey target decision-making serves as a pivotal analytical tool for addressing dynamic multi-attribute group decision-making amidst uncertain information. However, the setting of…
Abstract
Purpose
Grey target decision-making serves as a pivotal analytical tool for addressing dynamic multi-attribute group decision-making amidst uncertain information. However, the setting of bull's eye is frequently subjective, and each stage is considered independent of the others. Interference effects between each stage can easily influence one another. To address these challenges effectively, this paper employs quantum probability theory to construct quantum-like Bayesian networks, addressing interference effects in dynamic multi-attribute group decision-making.
Design/methodology/approach
Firstly, the bull's eye matrix of the scheme stage is derived based on the principle of group negotiation and maximum satisfaction deviation. Secondly, a nonlinear programming model for stage weight is constructed by using an improved Orness measure constraint to determine the stage weight. Finally, the quantum-like Bayesian network is constructed to explore the interference effect between stages. In this process, the decision of each stage is regarded as a wave function which occurs synchronously, with mutual interference impacting the aggregate result. Finally, the effectiveness and rationality of the model are verified through a public health emergency.
Findings
The research shows that there are interference effects between each stage. Both the dynamic grey target group decision model and the dynamic multi-attribute group decision model based on quantum-like Bayesian network proposed in this paper are scientific and effective. They enhance the flexibility and stability of actual decision-making and provide significant practical value.
Originality/value
To address issues like stage interference effects, subjective bull's eye settings and the absence of participative behavior in decision-making groups, this paper develops a grey target decision model grounded in group negotiation and maximum satisfaction deviation. Furthermore, by integrating the quantum-like Bayesian network model, this paper offers a novel perspective for addressing information fusion and subjective cognitive biases during decision-making.
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