Decision-making under risk and uncertainty and its application in strategic management

Abstract

We introduce a new decision-making model that unifies risk and uncertain environments in the same formulation. For doing so, we present the induced probabilistic ordered weighted averaging (IPOWA) operator. It is an aggregation operator that unifies the probability with the OWA operator in the same formulation and considering the degree of importance of each concept in the aggregation. Moreover, it also uses induced aggregation operators that provide a more general representation of the attitudinal character of the decision-maker. We study its applicability and we see that it is very broad because all the previous studies that use the probability or the OWA operator can be revised and extended with this new approach. We briefly analyze some basic applications in statistics such as the implementation of this approach with the variance, the covariance, the Pearson coefficient and in a simple linear regression model. We focus on a multi-person decision-making problem in strategic management. Thus, we are able to construct a new aggregation operator that we call the multi-person IPOWA operator. Its main advantage is that it can deal with the opinion of several persons in the analysis so we can represent the information in a more complete way.

Keywords:

• OWA operator
• probabilities
• induced aggregation operators
• uncertainty
• multi-person decision-making
• strategic management

JEL Classification:

• C44
• C49
• D81
• D89

Additional information

Notes on contributors

José M. Merigó

José M. MERIGÓ has a MSc and a PhD degree in Business Administration from University of Barcelona, Spain. His PhD received the Extraordinary Award from the University of Barcelona. He also holds a Bachelor Degree in Economics and a Master in European Business Administration and Business Law from Lund University, Sweden. He is an Assistant Professor in the Department of Business Administration at the University of Barcelona. He has published more than 200 papers in journals, books and conference proceedings including journals such as Information Sciences, International Journal of Intelligent Systems, Technological and Economic Development of Economy, Expert Systems with Applications, Computers & Industrial Engineering, International Journal of Uncertainty, Fuzziness and Knowledge-Based Systems, Cybernetics & Systems, International Journal of Fuzzy Systems. He has published 4 books including one edited with World Scientific “Computational Intelligence in Business and Economics”. He is on the editorial board of several journals including the Journal of Advanced Research on Fuzzy and Uncertain Systems and the ISTP Transactions of Systems & Cybernetics. He has participated in several scientific committees and as a reviewer in a wide range of journals. He is currently interested in Aggregation Operators, Decision Making and Uncertainty.