A decision-making framework based on the prospect theory under an intuitionistic fuzzy environment

• Main Authors: Jing Gu, Zijian Wang, Zeshui Xu, Xuezheng Chen
• Format: Article
• Language: English
• Published: Vilnius Gediminas Technical University 2018-12-01
• Series: Technological and Economic Development of Economy
• Subjects: decision processes; prospect theory; intuitionistic fuzzy set; intuitionistic fuzzy prospect value
• Online Access: https://www.bme.vgtu.lt/index.php/TEDE/article/view/6981
• ISSN: 2029-4913; 2029-4921

Uncertainty and ambiguity are frequently involved in the decision-making process in our daily life. This paper develops a generalized decision-making framework based on the prospect theory under an intuitionistic fuzzy environment, by closely integrating the prospect theory and the intuitionistic fuzzy sets into our framework. We demonstrate how to compute the intuitionistic fuzzy prospect values as the reference values for decision-making and elaborate a four-step editing phase and a valuation phase with two key functions: the value function and the weighting function. We then conduct experiments to test our decision- making methodology and the key features of our framework. The experimental results show that the shapes of the value function and the weighting function in our framework are in line with those of prospect theory. The methodology proposed in this paper to elicit prospects that are not only under uncertainty but also under ambiguity. We reveal the decision-making behavior pattern through comparing the parameters. People are less risk averse when making decisions under an intuitionistic fuzzy environment than under uncertainty. People still underestimate the probability of the events in our experiment. Further, the choices of participants in the experiments are consistent with the addition and multiplication principles of our framework.