TY - JOUR
T1 - Investing in real-world equity markets with an AHP-based decision framework
AU - Cheung, Michael Tow
AU - LIAO, Victor
N1 - Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.
PY - 2009
Y1 - 2009
N2 - A decision framework based on the Analytic Hierarchy Process is presented to evaluate and select equity portfolios under a given investment horizon. It is shown that a hierarchical structure can readily accommodate the complexity and information-computation constraints of this decision problem in real-world stock markets, ranging from a manydimensional investment environment, diverse asset characteristics, individual preferences, perceptions, judgments, expectations, and experience, and multiple qualitative or quantitative criteria. Once the weights obtained from pairwise comparisons in each level of the hierarchy are synthesized with reference to the decision objective, a rationally-determined portfolio emerges through the correspondingly prioritized allocation of equities over a given wealth. Our decision framework offers a flexible and readily applicable addition to the financial practitioner's menu of equity selection techniques, and suggests fruitful extensions to optimize the use of knowledge under bounded rationality and to other areas of asset investment.
AB - A decision framework based on the Analytic Hierarchy Process is presented to evaluate and select equity portfolios under a given investment horizon. It is shown that a hierarchical structure can readily accommodate the complexity and information-computation constraints of this decision problem in real-world stock markets, ranging from a manydimensional investment environment, diverse asset characteristics, individual preferences, perceptions, judgments, expectations, and experience, and multiple qualitative or quantitative criteria. Once the weights obtained from pairwise comparisons in each level of the hierarchy are synthesized with reference to the decision objective, a rationally-determined portfolio emerges through the correspondingly prioritized allocation of equities over a given wealth. Our decision framework offers a flexible and readily applicable addition to the financial practitioner's menu of equity selection techniques, and suggests fruitful extensions to optimize the use of knowledge under bounded rationality and to other areas of asset investment.
KW - Behavioral-judgmental perspective
KW - System
UR - http://www.scopus.com/inward/record.url?scp=79952210429&partnerID=8YFLogxK
U2 - 10.3166/jds.18.149-163
DO - 10.3166/jds.18.149-163
M3 - Journal article
AN - SCOPUS:79952210429
SN - 1246-0125
VL - 18
SP - 149
EP - 163
JO - Journal of Decision Systems
JF - Journal of Decision Systems
IS - 2
ER -