scholarly journals Path Choice of Emergency Logistics Based on Cumulative Prospect Theory

2019 ◽  
Vol 2019 ◽  
pp. 1-11
Author(s):  
Chang-feng Zhu ◽  
Zheng-kun Zhang ◽  
Qing-rong Wang
Keyword(s):  
Prospect Theory ◽  
Risk Attitude ◽  
Cumulative Prospect Theory ◽  
Decision Makers ◽  
Logistics Network ◽  
Moment Estimation ◽  
Emergency Logistics ◽  
The Moment ◽  
Decision Making Model ◽  
Uncertainty Environment

We study the problem of path choice for emergency logistics in this paper. Based on the uncertainty environment during the path choice from emergency logistics network and the bounded rationality of decision makers, cumulative prospect theory is introduced to study the problem of emergency logistics path choice with comprehensive consideration of path properties and risk attitude of decision makers. In addition, the decision behavior of decision maker with the attitude of risk seeking and risk aversion under limited rationality is comprehensively analyzed respectively. Based on the choice behavior, a strategy to demarcate the value of reference point value is also proposed, and an optimization model is used to obtain the combined weight based on the moment estimation. Finally, both the theory and model are verified by calculation and compared analysis in a case study. In addition, perturbation analyses of related parameter are carried out to further reveal the influence mechanism between the prospect value of each path and related parameters. The result shows that the decision-making model can make emergency logistics path choice with higher efficiency and reliability under different complex interference conditions.

scholarly journals The path selection model of emergency logistics based on cumulative prospect theory

2019 ◽  
Vol 136 ◽  
pp. 04067 ◽  
Author(s):  
Yihua Wang ◽  
Mengke Yang ◽  
Xiaoguang Zhou
Keyword(s):  
Decision Making ◽  
Prospect Theory ◽  
Large Scale ◽  
Risk Attitude ◽  
Cumulative Prospect Theory ◽  
Path Selection ◽  
Selection Model ◽  
Final Decision ◽  
Emergency Logistics ◽  
The Impact

In recent years, sudden natural disasters occur frequently. Typical emergencies have the characteristics of great uncertainty, large-scale casualty risk, time pressure and urgency, which have a series of serious and sustained impacts on people's production and life. Therefore, after the emergencies, emergency rescue is particularly important for disaster-stricken areas, and the decision-making of emergency logistics is an important part of it. At present, the research on emergency logistics in China focuses on the shortest distribution time, multi-objective decision-making, dynamic path planning, and operational research. It is believed that people are completely rational in making decisions, ignoring people's subjective factors and risk attitudes. From the perspective of decision-makers' risk attitude, this paper studies people's decision-making bias under the condition of incomplete rationality. Based on previous studies, this paper determines the value coefficient and weight coefficient, and according to the characteristics of emergency logistics, time is selected as the reference point., and A path selection model based on cumulative prospect theory is established. According to the risk attitude, the decision maker is divided into risk preference type and risk avoidance type. Based on the established model, an example is simulated, and the parameters in the model are simulated, and the impact of risk attitude and parameter changes on the final decision-making is analyzed. The simulation results show that the cumulative prospect theory is applicable to the study of emergency logistics decision-making mechanism, and the parameter setting will also have an important impact on the path prospect.

Evaluation of the development ability of medical association based on evidential reasoning and prospect theory

2021 ◽  
pp. 1-18
Author(s):  
Tao Zhang ◽  
Shizheng Li ◽  
Jin Wang
Keyword(s):  
Prospect Theory ◽  
Comprehensive Evaluation ◽  
Risk Attitude ◽  
Decision Makers ◽  
Evidential Reasoning ◽  
Evaluation Index System ◽  
Evaluation Index ◽  
Equivalent Transformation ◽  
Qualitative And Quantitative ◽  
Quantitative Indexes

China has proposed medical couplet body to alleviate residents’ difficulties in seeking medical treatment, and the future development ability of medical couplet body has gradually become a research interest. On the basis of prospect theory, this study constructs a comprehensive evaluation index system with qualitative and quantitative indexes, clear hierarchy, and diverse attribute characteristics. The development ability of medical couplet body is also comprehensively and systematically evaluated. In addition, the evidential reasoning method is proposed on the basis of the equivalent transformation of prospect value. Furthermore, the validity and feasibility of the model are proven through experiments, and the influence of decision makers’ risk attitude on the evaluation results is discussed.

Decision-making of investment in navigation safety improving schemes with application of cumulative prospect theory

2018 ◽  
Vol 232 (6) ◽  
pp. 710-724 ◽  
Author(s):  
Lei Wang ◽  
Qing Liu ◽  
Tongle Yin
Keyword(s):  
Decision Making ◽  
Prospect Theory ◽  
Investment Decision ◽  
Cumulative Prospect Theory ◽  
Decision Makers ◽  
Investment Decision Making ◽  
Risk Appetite ◽  
Safety Investment ◽  
Navigation Safety

Navigation safety improving investment aims at mitigating risk and improving safety of shipping system, while decision-makers’ attitudes toward the uncertainty of shipping safety possess a characteristic of “bounded rationality.” To study the tendency of shipping safety investment decision-making with different risk perception and appetite, a decision-making method based on cumulative prospect theory is proposed in this article. First, we extract the decision attributes through analyzing the factors affecting shipping safety investment. Then, according to cumulative prospect theory, the value function and the probability weighting function for calculating cumulative prospect values of shipping investment attributes are given. Under the risk-based multi-attribute group decision-making framework, linear programming model and projection method are introduced to aggregate the weights of attributes and decision-makers, respectively. Furthermore, through a case study, the proposed methodology is utilized in Three Gorges Dam area, and the desirable safety investment scheme is determined from a set of candidate alternatives. The case study shows not only validity and feasibility of the decision-making approach but also the mechanism of shipping safety investment decision-making with consideration of the behavior characteristics of decision-makers such as reference dependence, risk appetite distortion, and loss aversion.

Subjective Skewness of Return as an Explanation of the Optimal Choice between Gambles in Cumulative Prospect Theory

2013 ◽  
Vol 2 (2) ◽  
pp. 97-108
Author(s):  
David Peel
Keyword(s):  
Utility Function ◽  
Prospect Theory ◽  
Expected Utility ◽  
Cumulative Prospect Theory ◽  
Optimal Choice ◽  
Decision Makers ◽  
Expected Return ◽  
Positive Skewness

Given that the expected return and variance of return of two gambles are equal  the hypothesis that the gamble with the greater  positive skewness of return will be chosen by an expected utility maximiser is appealing. However the hypothesis is  not, in general, correct. Brockett and Garven (1998) and Brocket and Kahane (1992) demonstrate this both theoretically and by constructing counter examples.A particularly revealing example is the following one constructed by Brockett and Kahane.  Gamble A has the two outcomes 2.45 and 7.49 with probabilities 0.5141 and 0.4859 respectively. Gamble B has the three outcomes 0, 4.947 and 10 with probabilities 0.12096, 0.750085 and 0.128955 respectively. Even though gamble A exhibits  lower expected return,  a higher variance and lower  positive skewness than gamble B it is preferred to gamble B by an expected utility maximiser on the basis of any standard utility function  such as power, log or exponential.  Consequently in this  example of theirs the expected utility maximiser exhibits an aversion to higher expected return and higher skewness and a preference for higher variance. As noted by Brockett and Kahane these results cannot be dismissed as decision makers “trading” variance for mean or skewness or having a strange idiosyncratic utility function.

scholarly journals Extended GRA Method Based on Cumulative Prospect Theory with Probabilistic Hesitant Fuzzy Information for MAGDM and its Application to Green Supplier Selection

2021 ◽  
Author(s):  
Ningna Liao ◽  
Guiwu Wei ◽  
Xudong Chen
Keyword(s):  
Prospect Theory ◽  
Simulation Analysis ◽  
Cumulative Prospect Theory ◽  
Decision Makers ◽  
Risk Appetite ◽  
Probabilistic Values ◽  
Grey Relational ◽  
Decision Elements ◽  
Different Levels ◽  
Selection Of

Abstract An extended grey relational analysis (GRA) method is introduced in this article to reduce the limitations of the classical GRA method using the cumulative prospect theory (CPT) which takes into account psychological factors such as the risk appetite of decision makers. Moreover, the circumstance of probabilistic hesitant fuzzy (PHF) which assigns probabilistic values to DMs’ different levels of hesitation shows its superiority when making decisions in a complex environment. Meanwhile the weighting vector of each attribute is calculated according to the entropy which is calculated by the different prospect decision elements. Thus, in this paper, we proposed an extended GRA method based on cumulative prospect theory in the probabilistic hesitant fuzzy circumstance and applying the model in the selection of the green supplier. At last, the comparative analysis and the simulation analysis are made to show the practicability of this newly proposed method.

Analysis of Individual Risk Attitude for Risk Management Based on Cumulative Prospect Theory

2009 ◽  
pp. 254-270
Author(s):  
Fei-Chen Hsu ◽  
Hsiao-Fan Wang
Keyword(s):  
Risk Management ◽  
Risk Analysis ◽  
Prospect Theory ◽  
Evaluation Model ◽  
Risk Attitude ◽  
Cumulative Prospect Theory ◽  
Risk Level ◽  
Individual Risk ◽  
Court Case ◽  
Risk Response

In this chapter, we used Cumulative Prospect Theory to propose an individual risk management process (IRM) including a risk analysis stage and a risk response stage. According to an individual’s preferential structure, an individual’s risk level for the confronted risk can be identified from risk analysis. And based on a response evaluation model, the appropriate response strategy is assessed at the risk response stage. The applicability of the proposed model is evaluated by an A-C court case. The results have shown that the proposed method is able to provide more useful and pertinent information than the traditional method of decision tree by using the expected monetary value (EMV).

scholarly journals BIDDING DECISION IN LAND AUCTION USING PROSPECT THEORY

2015 ◽  
Vol 19 (2) ◽  
pp. 186-205 ◽  
Author(s):  
Yanyan PENG ◽  
Xinwang LIU
Keyword(s):  
Prospect Theory ◽  
Reference Point ◽  
Great Influence ◽  
Cumulative Prospect Theory ◽  
Decision Makers ◽  
Appearance Time ◽  
Sequential Model ◽  
Decision Under Risk ◽  
Decision Cycle ◽  
Bidding Price

Land auction is widely practiced in company and government decisions, especially in China. Bidders are always faced with two or more auctions in the period of a decision cycle. The outcome of the auction is under high risk. The bidder's risk attitude and preference will have a great influence on his/her bidding price. Prospect theory is currently the main descriptive theory of decision under risk. In this paper, we will consider the preferences of the decision-makers in land bidding decisions with the multi-attribute additive utility and reference point method in cumulative prospect theory. Three land auction models are proposed based on the appearance time of the land auctions. The simultaneous model uses cumulative prospect theory without considering the relationships between the auctions. The time sequential model involves the exchange auction decisions at different time with the third-generation prospect theory. The event sequential model further considers the reference point prediction in sequential land auction decisions. The three models can help the decision-makers make better bidding price decision when they are faced with several land auctions in the period of a decision cycle. A case study illustrates the processes and results of our approaches.

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