Multiple attribute decision-making based on a prospect theory-based TOPSIS method for venture capital selection with complex information

Venture capitalists are heavily influenced by their psychological state and intuition when making investment decisions in uncertain investment environments. To choose promising enterprises in China, it is necessary to understand how to consider both the uncertainty of venture capital and constrained rationality of venture capitalists. Considering the risk of information ambiguity and psychological factors of venture capitalists in a complex environment, a multiple-attribute decision-making (MADM) approach combining TOPSIS and prospect theory is investigated under a probabilistic linguistic q-Rung ortho-pair fuzzy (PLq-ROF) situation. First, a modified weight determination rule is proposed to derive the attribute importance owing to the different preferences of venture capitalists on the attribute sets. Second, psychological risk factors of venture capitalists are introduced into decision-making with the PLq-ROFS, and its prospect value function is also defined. Furthermore, the PLq-ROFS assessment is converted into a value matrix, and based on this, the ratio of gains to losses for each enterprise is computed to determine the ranking of the enterprises. Finally, the application process of the proposed method is demonstrated using Ali Capital as an example to select the most profitable enterprise for venture capitalists. The effectiveness and the applicability of the proposed method are further illustrated by a comparison with existing methods.