Sovereign Credit Risk Assessment with Multiple Criteria Using an Outranking Method

Algorithm 1

Routine for PROMETHEE II.

Step 1. Determine the deviations based on pairwise comparisons.

Where denotes the difference between the consequences of the alternatives and for each criterion j.

Step 2. Apply the preference function.

Where denotes the preference of alternative of over the alternative , for each criterion j, based on the deviation

.

Step 3. Calculate the outranking degree.

When the outranking degree of the alternative over the alternative is the weighted sum of the set of preference functions of

the form because of the weights of the criteria, represented by .

Step 4. Calculate the positive and negative flows regarding the partial ranking of PROMETHEE I

Where e denote, respectively, the negative and positive flows of alternative .

Step 5. Calculate the net flow with regard to the complete order of PROMETHEE II

Where denotes the net flow with regard to alternative