Intuitionistic fuzzy risk adjusted discount rate and certainty equivalent methods for risky projects


Haktanır E., Kahraman C.

International Journal of Production Economics, vol.257, 2023 (SCI-Expanded) identifier

  • Publication Type: Article / Article
  • Volume: 257
  • Publication Date: 2023
  • Doi Number: 10.1016/j.ijpe.2022.108757
  • Journal Name: International Journal of Production Economics
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus, ABI/INFORM, Applied Science & Technology Source, Business Source Elite, Business Source Premier, Computer & Applied Sciences, EconLit, Food Science & Technology Abstracts, INSPEC, Civil Engineering Abstracts
  • Keywords: Certainty equivalent, Intuitionistic fuzzy sets, Risk adjusted discount rate
  • Istanbul Technical University Affiliated: Yes

Abstract

© 2022 Elsevier B.V.Risk adjusted interest rate (RADR) method and certainty equivalent (CE) method are the two popular methods used under risky conditions in the investment analysis. However, it should not be forgotten that there may be a vagueness in the estimation of risk factors. In this study, novel RADR and CE methods are extended for use under uncertainty by using single valued intuitionistic fuzzy (IF) sets. All investment parameters are used as IF parameters. High speed rail and nuclear power plant investments given in the study were analyzed with IF-RADR and IF-CE methods. This study constitutes an important resource on how to analyze investments under risk with other fuzzy sets extensions. Another important aspect of the study is that the paper determines IF numbers consciously instead of assigning random fuzzy numbers and letting them be applied, e.g., IF-RADR and IF-CE values are determined to express the same vagueness and impreciseness. The study also includes an IF sensitivity analysis for a nuclear power plant investment problem. It is concluded with discussions and future research suggestions.