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1 – 1 of 1Warattaya Chinnakum, Laura Berrout Ramos, Olugbenga Iyiola and Vladik Kreinovich
In real life, we only know the consequences of each possible action with some uncertainty. A typical example is interval uncertainty, when we only know the lower and upper bounds…
Abstract
Purpose
In real life, we only know the consequences of each possible action with some uncertainty. A typical example is interval uncertainty, when we only know the lower and upper bounds on the expected gain. A usual way to compare such interval-valued alternatives is to use the optimism–pessimism criterion developed by Nobelist Leo Hurwicz. In this approach, a weighted combination of the worst-case and the best-case gains is maximized. There exist several justifications for this criterion; however, some of the assumptions behind these justifications are not 100% convincing. The purpose of this paper is to find a more convincing explanation.
Design/methodology/approach
The authors used utility approach to decision-making.
Findings
The authors proposed new, hopefully more convincing, justifications for Hurwicz’s approach.
Originality/value
This is a new, more intuitive explanation of Hurwicz’s approach to decision-making under interval uncertainty.
Details