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Integration of prospect theory into PROMETHEE - a case study concerning sustainable bioenergy concepts

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  • Nils Lerche
  • Jutta Geldermann

Abstract

An important objective of outranking methods is that the decision maker should be able to incorporate any argument into the process to achieve better awareness of the decision problem. However, in order to represent actual preferences of the decision maker, consideration of behavioural effects appears to be necessary. In this paper, a new approach that integrates findings from prospect theory into PROMETHEE is illustrated. In particular, the elements of reference dependency and loss aversion are incorporated. For this purpose, it is necessary to define an adequate reference alternative. Moreover, the existing preference functions and the way of aggregating pairwise comparisons have been adjusted. In order to test the newly developed approach, it is applied using an existing decision matrix from a joint research project concerned with the identification of a sustainable bioenergy concept. Finally, the results as well as potential advantages and challenges of the new approach are discussed.

Suggested Citation

  • Nils Lerche & Jutta Geldermann, 2015. "Integration of prospect theory into PROMETHEE - a case study concerning sustainable bioenergy concepts," International Journal of Multicriteria Decision Making, Inderscience Enterprises Ltd, vol. 5(4), pages 309-333.
    • Handle: RePEc:ids:ijmcdm:v:5:y:2015:i:4:p:309-333
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    Citations

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    Cited by:

    1. Aleksandra Król & Jerzy Księżak & Elżbieta Kubińska & Stelios Rozakis, 2018. "Evaluation of Sustainability of Maize Cultivation in Poland. A Prospect Theory—PROMETHEE Approach," Sustainability, MDPI, vol. 10(11), pages 1-19, November.
    2. Kubińska, Elżbieta & Adamczyk-Kowalczuk, Magdalena & Andrzejewski, Mariusz & Rozakis, Stelios, 2022. "Incorporating the status quo effect into the decision making process: The case of municipal companies merger," Socio-Economic Planning Sciences, Elsevier, vol. 84(C).
    3. Melkonyan, Ani & Gruchmann, Tim & Lohmar, Fabian & Kamath, Vasanth & Spinler, Stefan, 2020. "Sustainability assessment of last-mile logistics and distribution strategies: The case of local food networks," International Journal of Production Economics, Elsevier, vol. 228(C).
    4. Lerche, Nils & Wilkens, Ines & Schmehl, Meike & Eigner-Thiel, Swantje & Geldermann, Jutta, 2019. "Using methods of Multi-Criteria Decision Making to provide decision support concerning local bioenergy projects," Socio-Economic Planning Sciences, Elsevier, vol. 68(C).
    5. Aikaterini Papapostolou & Charikleia Karakosta & Kalliopi-Anastasia Kourti & Haris Doukas & John Psarras, 2019. "Supporting Europe’s Energy Policy Towards a Decarbonised Energy System: A Comparative Assessment," Sustainability, MDPI, vol. 11(15), pages 1-26, July.

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