Decision Making on Energy Options: A Case Study
Major decisions are made without advance knowledge of their consequences including decision on energy options. In spite of the best efforts initiated in the development of renewable energy resources, it is too early to visualize that the ever-increasing gap between supply and demand of energy, for peaceful purposes, should be bridged in the near future. A mix of low carbon sources, including nuclear energy and renewable energy, while limiting greenhouse gases is considered a viable solution with less/no computations. In this chapter, a brief write up on Kahneman and Tversky’s Prospect Theory is presented. Authors believe that the perception of gain, loss and risk are intrinsically fuzzy due to limited or no information about the future scenario. Computing with words, a facet of Restriction—Centered Theory of Reasoning and Computation (RCC) proposed by Prof. Lotfi A. Zadeh, could therefore be a useful armamentarium in decision making under risk and uncertainty. The case study, describing decision-making for the energy prospects (options) in India under risk and uncertainty, is presented by using prospect theory, type-1 and type-2 fuzzy relational calculus- a subset of Computing with Words. A commentary on safety of nuclear plants in India is an integral part of the chapter.
KeywordsDecision making Prospect theory Cumulative prospect theory Type-1 and Type-2 fuzzy relations Renewable and nonrenewable energy resources Computing with words Reference point
We are deeply indebted and would like to express our immense gratitude towards Prof. Lotfi A. Zadeh, the father of fuzzy logic for his motivation and all helpful and insightful suggestions. Also, the authors thank the esteemed referees for their valuable comments and suggestions.
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