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Article

Cumulative Prospect Theory Version with Fuzzy Values of Outcome Estimates

Rezekne Academy of Technologies, LV-4601 Rezekne, Latvia
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Academic Editor: Mogens Steffensen
Risks 2021, 9(4), 72; https://doi.org/10.3390/risks9040072
Received: 1 March 2021 / Revised: 26 March 2021 / Accepted: 6 April 2021 / Published: 13 April 2021
Choosing solutions under risk and uncertainty requires the consideration of several factors. One of the main factors in choosing a solution is modeling the decision maker’s attitude to risk. The expected utility theory was the first approach that allowed to correctly model various nuances of the attitude to risk. Further research in this area has led to the emergence of even more effective approaches to solving this problem. Currently, the most developed theory of choice with respect to decisions under risk conditions is the cumulative prospect theory. This paper presents the development history of various extensions of the original expected utility theory, and the analysis of the main properties of the cumulative prospect theory. The main result of this work is a fuzzy version of the prospect theory, which allows handling fuzzy values of the decisions (prospects). The paper presents the theoretical foundations of the proposed version, an illustrative practical example, and conclusions based on the results obtained. View Full-Text
Keywords: decision making with risk; expected utility theory; probability weighting; rank dependent utility; value function; prospect theory decision making with risk; expected utility theory; probability weighting; rank dependent utility; value function; prospect theory
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MDPI and ACS Style

Uzhga-Rebrov, O.; Grabusts, P. Cumulative Prospect Theory Version with Fuzzy Values of Outcome Estimates. Risks 2021, 9, 72. https://doi.org/10.3390/risks9040072

AMA Style

Uzhga-Rebrov O, Grabusts P. Cumulative Prospect Theory Version with Fuzzy Values of Outcome Estimates. Risks. 2021; 9(4):72. https://doi.org/10.3390/risks9040072

Chicago/Turabian Style

Uzhga-Rebrov, Oleg, and Peter Grabusts. 2021. "Cumulative Prospect Theory Version with Fuzzy Values of Outcome Estimates" Risks 9, no. 4: 72. https://doi.org/10.3390/risks9040072

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