Fuzzy Method for Decision Making: A Case of Asset Pricing Model

Method / Decision-making and Valuation

Fuzzy Method for Decision Making: A Case of Asset Pricing Model
gholamreza soleimani , Management Consultant, Iran

Fuzzy method, Decision making, Asset pricing model.

There are always many ways to solve the problem but we should only choose the best way among them to take an action. How can we find the optimized choice? The process of optimization the ways for solving of the problem is defined as decision making in which the output of this process will be an action. Nowadays, we need to use the process of decision making in all sciences such as Strategic Management, Financial Management, Engineering, Medicine and especially Political science. When we refer to this process, we can often see that there is the lack of information or vague values for the parameters which are affecting on the case something like uncertainty on data and so on that it is named as Fuzzy environment. Fuzzy Set theory gives us the opportunity to grade all alternatives (ways) where we should abandon the approach of 0, 1 in our mind. In fact, this method is one the best tools to solve the paradoxes.
The purpose of this article is to apply intersection of fuzzy sets to obtain the results (alternatives) in the frame of a new fuzzy set as the process of decision making where the alternatives are a crisp set and maximum membership function of this new fuzzy set gives us the best alternative (best way) to take an action. Then a new method of fuzzy number intersections has been demonstrated. A case study of asset pricing model is given to perceive purposed method. Finally, some laws and a new formula about distance measurement among fuzzy numbers have been listed.

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