Computing Efficient Financial Strategies: An Extended Compromise Programming Approach

Abstract

This paper proposes a mathematical model to plan the financial strategy of a large company. The model links the philosophy of new behavioural economics with the multiple criteria decision making paradigm. Within this theoretical approach, the proposed model is supported by more realistic behavioral hypotheses. After formulating the initial multi-objective programming model, it has, due to its underlying computational difficulties, to be transformed into an easily computable extended compromise programming model. The functional and empirical potential of the model is illustrated with the help of a case study concerning a “stock market quoted” Spanish company operating in the energy sector. This paper shows how such an approach can open up new prospects for research linking economic problems with applied mathematics