Decision Making Approach with Focus Point and Regret
LI Yonggang, HU XiangpeiFaculty of Economics and Management, Dalian University of Technology, Dalian 116024, Liaoning, China
In this paper, decision making under uncertainty with regret is studied. The alternative is evaluated by focus point to fit the feature that the decision process cannot be repeated many times. If the objective captured by focus point is not achieved, there is a regret. The regret of an action is determined by the focus point of the other actions. The set of the alternatives available is updated by the regret threshold, and the optimal action can be obtained by the selected focus point of each alternative. The proposed method is a new fundamental alternative for decision making under uncertainty. Using focus point as reference gives the regret a clear meaning. The decision making procedure matches the intuitive expectations of human being. It explains the phenomena that does not conform to classical decision making theory.
Key words:decision making under uncertainty; regret; focus point; likelihood
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