Vol. 12, No. 4, 2019

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Applying prospect theory to multiattribute problems with independence assumptions

Jack Stanley and Frank P. A. Coolen

Vol. 12 (2019), No. 4, 687–711
DOI: 10.2140/involve.2019.12.687

We discuss a descriptive theory of decision making which has received much attention in recent decades: prospect theory. We specifically focus on applying the theory to problems with two attributes, assisted by different independence assumptions. We discuss a process for solving decision problems using the theory before applying it to a real life example of purchasing breakdown cover.

decision theory, independence, multiple attributes, prospect theory, utility theory
Mathematical Subject Classification 2010
Primary: 91B06, 91B16
Received: 20 July 2018
Revised: 4 October 2018
Accepted: 15 November 2018
Published: 16 April 2019

Communicated by Sat N. Gupta
Jack Stanley
Department of Mathematical Sciences
Durham University
United Kingdom
Frank P. A. Coolen
Department of Mathematical Sciences
Durham University
United Kingdom