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New Methods of Decision Making Under Uncertainty

Received: 4 December 2014     Accepted: 9 December 2014     Published: 27 December 2014
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Abstract

The classical formula of certainty equivalent is reconsidered. Based on a modified proof of the original formula several alternative methods are derived with different orders of magnitude of their errors. This new method is then compared with the classical formula in a computer study showing the advantage of the new approach. Practical applications are also outlined to illustrate the methodology.

Published in International Journal of Economic Behavior and Organization (Volume 3, Issue 2-1)

This article belongs to the Special Issue Recent Developments of Economic Theory and Its Applications

DOI 10.11648/j.ijebo.s.2015030201.12
Page(s) 5-9
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Uncertainity, Certainty Equivalent, Economic Application

References
[1] Bellman, R. and L.A.Zadeh (1970) Decision Making in a Fuzzy Environment. Management Science, 17(4), 141-164.
[2] Csábrági A, Molnár M (2011) Role of Non-Conventional Energy Sources in Supplying Future Energy Needs, Bulletin of the Szent István University, Gödöllő (Special Issue: p. 216). (2011)
[3] DeGroot, M.H. (1970) Optimal Stochastic Decisions. New York: McGraw-Hill.
[4] Hatvani I G, Magyar N, Zessner M, Kovács J, Blaschke A P (2014) The Water Framework Directive: Can more information be extracted from groundwater data? A case study of Seewinkel, Burgenland, eastern Austria, Hydrogeology Journal 22:(4) pp. 779-794. (2014)
[5] Kall, P. and S.W. Wallace (1994) Stochastic Programming. Chichester: Wiley.
[6] Kovács J, Kovács S, Magyar N, Tanos P, Hatvani I G, Anda A (2014) Classification into homogeneous groups using combined cluster and discriminant analysis, Environmental Modelling & Software 57: pp. 52-59. (2014)
[7] Molnár Márk (2014) Opportunities for Hungary under the Stability Reserve of the EU ETS, Journal of Central European Green Innovation 2:(2) pp. 105-114. (2014)
[8] Molnar, S., F. Szidarovszky. Game Theory, Multiobjective Optimization, Conflict Resolution, Differential Games (in Hungarian). Computerbooks, Budapest, Hungary, 2011.
[9] Prekopa, A. (1995) Stochastic Programming. Dordrecht: Kluwer Academic Publishers.
[10] Sargent, T.J. (1979) Macroeconomic Theory. New York: Academic Press.
[11] Szidarovszky, F., M. Gershon and L. Duckstein (1986) Techniques for Multi-objective Decision Making in Systems Management. Amsterdam: Elsevier.
[12] Szidarovszky, F. and S. Yakowitz (1978) Principles and Procedures of Numerical Analysis. New York: Plenum Press.
Cite This Article
  • APA Style

    Sándor Molnár, Ferenc Szidarovszky. (2014). New Methods of Decision Making Under Uncertainty. International Journal of Economic Behavior and Organization, 3(2-1), 5-9. https://doi.org/10.11648/j.ijebo.s.2015030201.12

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    ACS Style

    Sándor Molnár; Ferenc Szidarovszky. New Methods of Decision Making Under Uncertainty. Int. J. Econ. Behav. Organ. 2014, 3(2-1), 5-9. doi: 10.11648/j.ijebo.s.2015030201.12

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    AMA Style

    Sándor Molnár, Ferenc Szidarovszky. New Methods of Decision Making Under Uncertainty. Int J Econ Behav Organ. 2014;3(2-1):5-9. doi: 10.11648/j.ijebo.s.2015030201.12

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  • @article{10.11648/j.ijebo.s.2015030201.12,
      author = {Sándor Molnár and Ferenc Szidarovszky},
      title = {New Methods of Decision Making Under Uncertainty},
      journal = {International Journal of Economic Behavior and Organization},
      volume = {3},
      number = {2-1},
      pages = {5-9},
      doi = {10.11648/j.ijebo.s.2015030201.12},
      url = {https://doi.org/10.11648/j.ijebo.s.2015030201.12},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijebo.s.2015030201.12},
      abstract = {The classical formula of certainty equivalent is reconsidered. Based on a modified proof of the original formula several alternative methods are derived with different orders of magnitude of their errors. This new method is then compared with the classical formula in a computer study showing the advantage of the new approach. Practical applications are also outlined to illustrate the methodology.},
     year = {2014}
    }
    

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    AU  - Sándor Molnár
    AU  - Ferenc Szidarovszky
    Y1  - 2014/12/27
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    JF  - International Journal of Economic Behavior and Organization
    JO  - International Journal of Economic Behavior and Organization
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    AB  - The classical formula of certainty equivalent is reconsidered. Based on a modified proof of the original formula several alternative methods are derived with different orders of magnitude of their errors. This new method is then compared with the classical formula in a computer study showing the advantage of the new approach. Practical applications are also outlined to illustrate the methodology.
    VL  - 3
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Author Information
  • Institute of Mathematics and Informatics, Szent István University, Páter K. u.1., H-2100, G?d?ll?, Hungary

  • Department of Applied Mathematics, University of Pécs, Ifjúság u. 6, H-7624, Pécs, Hungary

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