Utility function induced by fuzzy target in probabilistic decision making

Abstract

It is widely accepted that a common precept for the choice under uncertainty is to use the expected utility maximization principle, which was established axiomatically. Recently, a formal equivalence between this principle of choice and the target-based principle, that suggests that one should select an action which maximizes the (expected) probability of meeting a (probabilistic) uncertain target, has been established and extensively discussed. In this paper, we discuss the issue of how to bring fuzzy targets within the reach of the target-based model for a class of decision making under uncertainty problems. Two methods for inducing utility functions from fuzzy targets are discussed and illustrated with an example taken from the literature. © Springer-Verlag Berlin Heidelberg 2006.