Establishing dominance between strategies with interval judgments of state probabilities

Abstract

In decision-making under uncertainty, a decision-maker is required to specify, possibly with the help of decision analysts, point estimates of the probabilities of uncertain events. In this setting, it is often difficult to obtain very precise measurements of the decision-maker's probabilities on the states of nature particularly when little information is available to evaluate probabilities, available information is not specific enough, or we have to model the conflict case where several information sources are available. In this paper, imprecise probabilities are considered for representing the decision-maker's perception or past experience about the states of nature, to be specific, interval probabilities, which can be further categorized as (a) intervals of individual probabilities, (b) intervals of probability differences, and (c) intervals of ratio probabilities. We present a heuristic approach to modeling a wider range of types of probabilities as well as three types of interval probabilities. In particular, the intervals of ratio probabilities, which are widely used in the uncertain AHP context, are analyzed to find extreme points by the use of change of variables, not to mention the first two types of interval probabilities. Finally, we examine how these extreme points can be used to determine an ordering or partial ordering of the expected values of strategies. (c) 2014 Elsevier Ltd. All rights reserved.