2008 journal article

A Comparison of Fuzzy Set and Probabilistic Paradigms for Ranking Vague Economic Investment Information Using a Present Worth Criterion

The Engineering Economist, 53(1), 42–67.

By: G. Sorenson & J. Lavelle n

co-author countries: United States of America πŸ‡ΊπŸ‡Έ
Source: Crossref
Added: August 28, 2020

This article introduces an approach for comparing the fuzzy set and probabilistic paradigms for ranking vague economic investment information when a present worth criterion is used. Comparisons are made between the two paradigms by forming a ratio of fuzzy ranking value to probabilistic ranking value for a set of tested economic decision conditions (vague cash flows and interest rates). A multivariable analysis of the comparison ratios indicates the dominance or spread required in the expected present worths of competing alternatives to guarantee consistent decision ranking among the paradigms. Results of the research suggest that probabilistic methods will not rank vague economic investment information the same as fuzzy set methods. As a result, decision makers who use probabilistic methods to model vagueness in human thought (the condition for which fuzzy theory was developed) may obtain rankings inconsistent with those obtained via the fuzzy models. In such cases, if decisions are based on project rankings, then different choices or recommendations are likely.