Risk Attitude Of Decision Maker Research Articles

Risk management of energy system for identifying optimal power mix with financial-cost minimization and environmental-impact mitigation under uncertainty

An interval-stochastic risk management (ISRM) method is launched to control the variability of the recourse cost as well as to capture the notion of risk in stochastic programming. The ISRM method can examine various policy scenarios that are associated with economic penalties under uncertainties presented as probability distributions and interval values. An ISRM model is then formulated to identify the optimal power mix for the Beijing's energy system. Tradeoffs between risk and cost are evaluated, indicating any change in targeted cost and risk level would yield different expected costs. Results reveal that the inherent uncertainty of system components and risk attitude of decision makers have significant effects on the city's energy-supply and electricity-generation schemes as well as system cost and probabilistic penalty. Results also disclose that import electricity as a recourse action to compensate the local shortage would be enforced. The import electricity would increase with a reduced risk level; under every risk level, more electricity would be imported with an increased demand. The findings can facilitate the local authority in identifying desired strategies for the city's energy planning and management in association with financial-cost minimization and environmental-impact mitigation.

Multi-criteria group decision-making method for optimal selection of sustainable industrial building options focused on petrochemical projects

Over the past three decades, sustainable development (SD) has gained wide recognition among decision makers and politicians. Today, this concept aims to provide a healthier environment, more-improved society, and developed economy in both developed and developing world communities. Thus, to achieve a sustainable community, one needs to first better understand the underlying indicators and adopt appropriate sustainable policies in different sections and sectors of the community. As a vital component, the construction industry plays a key role in SD, which has drawn the attention of decision makers to find sustainable solutions worldwide for such an active industry. Industrial buildings, as a large segment of the construction industry, consume vast amounts of energy and financial resources and have a major role in job creation and improving the quality of life in a society. Therefore, this paper focuses on social, economic, and environmental aspects of SD of industrial buildings to evaluate the sustainable indicators and to develop a combinatory multi-criteria group decision-making framework for optimal selection of sustainable options of industrial buildings. The developed framework considers uncertainty alongside various preference orders and risk attitudes of decision makers -using utility functions. The decision making process consists of two stages: the first stage, takes the advantages of integration of utility function, ELECTRE I (the elimination and choice translating reality), and Grey theory to create the new method of Grey-Utility-ELECTRE to rank the feasible alternatives. And the second stage utilizes the ordered weighted averaging (OWA) aggregation operator to aggregate the preferences of environmental, social, and economic dimension, as three decision makers, to determine the final ranking. Because this research focuses on the sustainability of industrial buildings, the performance and capabilities of the developed framework are demonstrated using five petrochemical buildings of a petrochemical company in Iran, as a case study.

Generalized Choquet Integral Operator of Triangular Atanassov’s Intuitionistic Fuzzy Numbers and Application to Multi-Attribute Group Decision Making

The purpose of this paper is to propose a new approach to interactive multi-attribute group decision making with triangular Atanassov's intuitionistic fuzzy numbers (TAIFNs). The contribution of this study is fivefold: (1) Minkowski distance between TAIFNs is firstly defined; (2) We define the possibility attitudinal expected values of TAIFNs and thereby present a novel risk attitudinal ranking method of TAIFNs which can sufficiently consider the risk attitude of decision maker; (3) The weighted average operator (TAIFWA) and generalized ordered weighted average (TAIFGWA) operator of TAIFNs are defined as well as the hybrid ordered weighted average (TAIFHOWA) operator; (4) To study the interaction between attributes, we further develop the generalized Choquet (TAIF-GC) integral operator and generalized hybrid Choquet (TAIF-GHC) integral operator of TAIFNs. Their desirable properties are also discussed; (5) The individual overall value of alternative is obtained by TAIF-GC operator and the collective one is derived through TAIFWA operator. Fuzzy measures of attribute subsets and expert weights are objectively derived through constructing multi-objective optimization model which is transformed into the goal programming model to solve. The system analyst selection example verifies effectiveness of the proposed approach.

Discrete choice models with q-product random utilities

While most existing closed-form discrete choice models can be regarded as special cases of McFadden's generalized extreme value model, recently, alternative frameworks of McFadden's generalized extreme value model, which maintain closed-form expressions, have been proposed; these include the weibit model, which uses the Weibull distribution for its random component. In this paper, we develop a generalized closed-form discrete choice model which include both logit and weibit models as special cases, by introducing the q-product random utility, in which the relationship between the systematic component and the random component can be either additive, multiplicative, or in-between, depending on the value of the parameter q. We show that, when imposing the Gumbel distribution on its error component (instead of assuming the additive case as the logit model), the parameter q depicts decision maker's risk attitude in the sense of the Arrow–Pratt measure of relative risk aversion, which would be a behavioral foundation of the model. We also show that the model can be straightforwardly extended to incorporate statistical dependence across alternatives. The performance of the proposed model is examined by using two case studies; one on travel-route choices and the other on transport-mode choices.

Risk decision-making based on Mahalanobis-Taguchi system and grey cumulative prospect theory for enterprise information investment

For the decision-making problem of enterprise information technology investment risk, based on existing research shortage, this paper proposes a risk decision-making method based on cloud model, Mahalanobis-Taguchi system and grey cumulative prospect theory with the consideration of the fuzziness o f evaluating language and subjective risk attitude of decision makers. The method results in the ``quantitative to qualitative'' transformation of risk evaluation in information technology investment by cloud model and constructs interval numbers decision matrices according to the ``3En'' principle. An m-dimensional interval numbers decision vector is regarded as super cuboids in m-dimensional attributes space, using two-level orthogonal experiment to arrange points uniformly and dispersedly. The numbers of points are assured by testing numbers of two-level orthogonal arrays and these points compose of distribution points set to stand for decision-making project. In order to eliminate the influence of correlation among indices, Mahalanobis distance is used to calculate the distance from each investment program to ideal programs. Since the decision-maker's attitude can affect the decision result when the investment decision-making in practice, the paper defines the grey correlation coefficient and the prospect value function based on Mahalanobis distance, and calculates the comprehensive prospect value of each program and finds the optimal one. Finally, an example application proves that the method is a feasible and effective method of decision-making. Compared with other methods, the result is much more realistic and superior.

Some new generalized aggregation operators for triangular intuitionistic fuzzy numbers and application to multi-attribute group decision making

The aim of this paper is to develop some new generalized aggregation operators for triangular intuitionistic fuzzy numbers (TIFNs) and apply to multi-attribute group decision making (MAGDM) problems. First, the weighted possibility attitudinal expected values of TIFNs are defined and a new method is presented to rank TIFNs considering risk attitude of decision maker (DM). The sensitivity analyses on attitudinal character parameter are given. Then, the triangular intuitionistic fuzzy weighted averaging (TIFWA) operator, ordered weighted averaging (TIFOWA) operator, ordered weighted geometric (TIFOWG) operator and hybrid weighted averaging (TIFHWA) operator are defined. We further develop some new generalized aggregation operators for TIFNs, involving the triangular intuitionistic fuzzy generalized ordered weighted averaging (TIFGOWA) operator and generalized hybrid weighted averaging (TIFGHWA) operator. Some desirable properties for these operators are discussed in detail. Utilizing the TIFGHWA and TIFWA operators, we propose a new method for MAGDM with TIFNs and incomplete weight information. In this method, DMs’ weights are determined by Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) and the weights of attributes are objectively derived through constructing a multi-objective programming model which is transformed into a linear goal program to solve. Finally, the example analysis of an investment selection example verifies the effectiveness and practicability of the proposed method in this paper.

A novel risk attitudinal ranking method for intuitionistic fuzzy values and application to MADM

The ranking of intuitionistic fuzzy sets (IFSs) is very important for the intuitionistic fuzzy decision making. The aim of this paper is to propose a new risk attitudinal ranking method of IFSs and apply to multi-attribute decision making (MADM) with incomplete weight information. Motivated by technique for order preference by similarity to ideal solution (TOPSIS), we utilize the closeness degree to characterize the amount of information according to the geometrical representation of an IFS. The area of triangle is calculated to measure the reliability of information. It is proved that the closeness degree and the triangle area just form an interval. Thereby, a new lexicographical method is proposed based on the intervals for ranking the intuitionistic fuzzy values (IFVs). Furthermore, considered the risk attitude of decision maker sufficiently, a novel risk attitudinal ranking measure is developed to rank the IFVs on the basis of the continuous ordered weighted average (C-OWA) operator and this interval. Through maximizing the closeness degrees of alternatives, we construct a multi-objective fractional programming model which is transformed into a linear program. Thus, the attribute weights are derived objectively by solving this linear program. Then, a new method is put forward for MADM with IFVs and incomplete weight information. Finally, an example analysis of a teacher selection is given to verify the effectiveness and practicability of the proposed method.

Triangular Fuzzy Multi-attribute Decision Making Based on Risk Attitude of Decision Maker

Triangular Fuzzy Multi-attribute Decision Making Based on Risk Attitude of Decision Maker

History-dependent risk attitude

We propose a model of history-dependent risk attitude, allowing a decision maker's risk attitude to be affected by his history of disappointments and elations. The decision maker recursively evaluates compound risks, classifying realizations as disappointing or elating using a threshold rule. We establish equivalence between the model and two cognitive biases: risk attitudes are reinforced by experiences (one is more risk averse after disappointment than after elation) and there is a primacy effect (early outcomes have the greatest impact on risk attitude). In a dynamic asset pricing problem, the model yields volatile, path-dependent prices.

Generalized ordered weighted utility proportional averaging-hyperbolic absolute risk aversion operators and their applications to group decision-making

This paper develops a new class of aggregation operator based on utility function, which introduces the risk attitude of decision makers (DMs) in the aggregation process. First, under the general framework of utility function, we provide a new operator called the generalized ordered weighted utility proportional averaging (GOWUPA) operator and study its properties which are suitable for any utility function. Then, under the hyperbolic absolute risk aversion (HARA) utility function, we propose another new operator named as the generalized ordered weighted utility proportional averaging-hyperbolic absolute risk aversion (GOWUPA-HARA) operator, and further investigate its families including a wide range of aggregation operators. To determine the GOWUPA-HARA operator weights, we put forward an orness measure of the GOWUPA-HARA operator and analyze its properties. Considering that different DMs may have different opinions towards decision-making and their opinions can be characterized by different orness measures, we construct a new nonlinear optimization model to determine the optimal weights which can aggregate all the individual sets of weights into an overall set of weights. Furthermore, based on the GOWUPA-HARA operator, a method for multiple attribute group decision- making (MAGDM) is developed. Finally, an example is given to illustrate the application of the GOWUPA-HARA operator to the MAGDM.

Generalized ordered weighted utility averaging-hyperbolic absolute risk aversion operators and their applications to group decision-making

Abstract This paper develops a new class of aggregation operator based on utility function, which introduces the risk attitude of decision makers (DMs) in the aggregation process. First, under the general framework of utility function, we provide a new operator called the generalized ordered weighted utility averaging (GOWUA) operator, and study its properties which are suitable for any utility function. Then, under the hyperbolic absolute risk aversion (HARA) utility function, we propose another new operator named as the generalized ordered weighted utility averaging-hyperbolic absolute risk aversion (GOWUA-HARA) operator, and further investigate its families including a wide range of aggregation operators. To determine the GOWUA-HARA operator weights, we put forward an orness measure of the GOWUA-HARA operator and analyze its properties. Considering that different DMs may have different opinions toward decision-making and their opinions can be characterized by different orness measures, we construct a new optimization model to determine the optimal weights which can aggregate all the individual sets of weights into an overall set of weights. Furthermore, based on the GOWUA-HARA operator, a method for the multiple attribute group decision-making (MAGDM) is developed. Finally, an example is given to illustrate the application of the GOWUA-HARA operator to the MAGDM.

Risk-based evaluation of wastewater treatment projects: A case study in Niasar city, Iran

For sustainable wastewater management, it is essential to consider social, environmental, geological and technical features as well as economic feature in the decision-making process. A limitation of many of the earlier works on wastewater management is that they take into account only financial criteria to make a decision for a given problem. Moreover, the decision-makers’ (DMs) attitude to risk, or optimism degree, when faced with uncertainty is not considered. In this paper, we study the application of risk-based multi-attribute decision-making (RB-MADM) methods to achieve sustainable wastewater management. Consideration of uncertainty, value tradeoffs, and different risk attitudes of decision makers are the important features of the developed methodology. A case study on the Iranian city of Niasar is presented to illustrate how this methodology can be applied to select the most preferred alternative for wastewater management among a set of options. The most preferred option is selected with respect to nine attributes under different optimism/pessimism degrees, using six different MADM methods. The results show that the ranking of options is sensitive to the optimism degree of the DMs. The proposed approach may help policy makers to achieve sustainable wastewater management.

Linguistic continuous ordered weighted distance measure and its application to multiple attributes group decision making

This paper develops a new method for group decision making and introduces a linguistic continuous ordered weighted distance (LCOWD) measure. It is a new distance measure that combines the linguistic continuous ordered weighted averaging (LCOWA) operator with the ordered weighted distance (OWD) measure considering the risk attitude of decision maker. Moreover, it also can relieve the influence of extremely large or extremely small deviations on the aggregation results by assigning them smaller weights. These advantages make it suitable to deal with the situations where the input arguments are represented with uncertain linguistic information. Some of the main properties of the LCOWD measure and different particular cases are studied. The applicability of the new approach is also analyzed focusing on a group decision making problem.

A risk attitudinal ranking method for interval-valued intuitionistic fuzzy numbers based on novel attitudinal expected score and accuracy functions

This article investigates new score and accuracy functions for ranking interval-valued intuitionistic fuzzy numbers (IVIFNs). The novelty of these functions is that they allow the comparison of IVIFNs by taking into account of the decision makers’ attitudinal character. The new attitudinal expected score and accuracy functions extend Xu and Chen's score and accuracy degree functions, and verify the following set of properties: (1) boundedness; (2) monotonicity; (3) commutativity; and (4) symmetry. These novel functions are used to propose a total order on the set of IVIFNs, and to develop an interval-valued intuitionistic fuzzy multi-attribute decision making selection process in which the final result depends on the decision maker's risk attitude. In addition, a ranking sensitivity analysis with respect to the risk attitude is provided.

On Compatibility of Interval Multiplicative Preference Relations Based on the COWGA Operator

The aim of this paper is to develop a new compatibility, which is very suitable to deal with group decision making (GDM) problems involving interval multiplicative preference relations, based on the continuous ordered weighted geometric averaging (COWGA) operator. First, we define some concepts of the compatibility degree and the compatibility index for the two interval multiplicative preference relations based on the COWGA operator. Then, we study some desirable properties of the compatibility index and investigate the relationship between each expert's interval multiplicative preference relation and the synthetic interval multiplicative preference relation. The prominent characteristic of the compatibility index based on the COWGA operator is that it can deal with the compatibility of all the arguments in two interval arguments considering the risk attitude of decision maker rather than the compatibility of the two simple points in intervals. Second, in order to determine the experts' weights in the GDM with the interval multiplicative preference relations, we propose an optimal model based on the criterion of minimizing the compatibility index. Finally, we give a numerical example to develop the new approach to GDM with interval multiplicative preference relations.

Systematic studies on three-way decisions with interval-valued decision-theoretic rough sets

Decision-theoretic rough sets (DTRS) are a representative rough set model. The loss function is a pivotal ingredient of DTRS, which is associated with the decision maker’s evaluation. Considering the value of loss function with the imprecise evaluation, interval-valued DTRS (IVDTRS) and its mechanism in this paper are explored. First, we construct a basic model of IVDTRS. The comparison between DTRS and IVDTRS is discussed. In the frame of IVDTRS, we then focus on deriving three-way decisions with the aid of two conventional methods, i.e., a certain ranking method and a degree of possibility ranking method, respectively. The certain ranking method converts an interval value into single and derives decision rules under a certain risk attitude of decision maker; the degree of possibility ranking method assumes the flexibility of interval and utilizes the preference between interval values. All the combinations and their prerequisites are summarized, in which we obtain two types of decision rules. Based on the above analysis, we further propose an optimization method for three-way decisions with IVDTRS, which is designed to minimize the overall uncertainty based on the Shannon entropy. We also compare these methods based on standard data sets. Finally, the criteria for choosing a suitable method to three-way decisions with IVDTRS are generated. These results can support decision making in the uncertain environment.

Private partner's risk response in PPP low-cost housing projects

Purpose – The purpose of this paper is to identify the salient risks borne by private firms and to investigate their effective risk response strategies in public-private partnership (PPP) low-cost housing (LCH) projects in Thailand. Design/methodology/approach – The paper employs grounded theory and case study methodologies to extensively analyze ten private firms’ risks and their strategic risk mitigation. As a result, the matrix of imperative risks’ root causes and the area of the project life cycle most exposed to their impacts were proposed. This included the framework of the risk response strategy application. Findings – The private firm's risk mitigation strategies depended on the salient risks’ impact and the private firms’ predictability and controllability of the risk outcome. This included the private firm's participating objectives and core business, decision maker's risk attitude, risk perception, experience of risk, and risk assessment skill, and the project life cycle phase of risk occurrence. Practical implications – Under the same characteristics of the immature PPP market in developing countries, the contractors’ effective risk management framework can be used as a guideline to complement the contractors’ decision making on risk response strategy selection and resource allocation in the PPP project life cycle. Originality/value – Despite working under the familiar environment of construction risk and generous payment method in PPP-LCH projects, only few contractors were successful. The examination of risks borne and effectively responded by the private sector increases the likelihood of the project success.

An experimental analysis of the behavior of forestry decision-makers — The example of timing in sales decisions

Despite the existing literature, it is still unclear whether and to what extent the behavior of forestry decision-makers can be predicted by means of normative models. To date, the actual decision-making behavior regarding logging has hence been only derived from the analysis of data gathered in surveys or on the basis of aggregated data. Currently, no studies exist that compare the individual timber harvesting behavior with a normative benchmark. The present study experimentally examines the behavior of decision-makers from forestry organizations by means of the example of selling a one-off property with a normative benchmark derived using the Jevons–Fisher rule. We investigate if the intuitive behavior shown by forestry decision-makers in an incentive-compatible experiment for the sale of a one-off property can be approximated to the optimal behavior according to the Jevons–Fisher rule. For determining the normative benchmark, the decision-maker's risk attitude measured by a Holt and Laury lottery is explicitly taken into account. The results reveal that, on average, participants decide earlier for selling the property than what would be expected according to the normative benchmark. This illustrates the importance of experimental investigations in order to better understand the decision-making behavior in a forestry setting. Furthermore, the findings indicate that risk-averse participants, males, participants who completed a forestry apprenticeship as well as participants with an economic-related educational background sell the property earlier. Older participants, participants holding a university degree, and participants interested in participating in further experiments sell the property rather later. Moreover, with progressive repetition of the property sale experiment, participants decide to sell the property earlier.

Possibility Method for Triangular Intuitionistic Fuzzy Multi-attribute Group Decision Making with Incomplete Weight Information

AbstractTriangular intuitionistic fuzzy numbers (TIFNs) are a special kind of intuitionistic fuzzy sets (IFSs) on a real number set. TIFNs are useful to deal with ill-known quantities in decision data and decision making problems themselves. The purpose of this paper is on developing a new ranking method of TIFNs and application to multiattribute group decision making (MAGDM) problems in which the attribute values are expressed with TIFNs and the information on attribute weights is incomplete. The weighted average operator of TIFNs is defined, the concepts of the possibility mean, variance of TIFNs as well as standard deviation are introduced. Hereby two new ranking indices considering the risk attitude of decision maker are developed to rank TIFNs. In the proposed group decision method, the collective overall attribute values of alternatives are obtained by using the weighted average operator of TIFNs We construct the multi-objective programming of maximizing the ranking indices of membership and non-mem...

Supply chain structure and risk attitude in the selection of environmentally friendly products

Compared with ordinary products, environmentally friendly products (EFPs) usually have higher cost for R&D and uncompetitive price. Also, there may be technological renovation and policy uncertainty leading to volatility of demand, which causes high risk to firms in green supply chains. Therefore, risk reduction and risk attitude of decision-makers (manufacturers and retailers) should be considered. In this study, we investigate the selection of EFPs with the consideration of the tradeoff between risk and return in two supply chain structures: vertical integration and a decentralised setting. A case study of a green supply chain offering household electrical appliances in China is presented to illustrate related issues. The results suggest that risk attitude has a significant impact on the selection of EFPs and a green supply chain with vertical integration achieves better environmental performance than a decentralised one.