The Cournot game under a fuzzy decision environment
Resource
COMPUTERS & MATHEMATICS WITH APPLICATIONS, 59(9), 3099-3109
Journal
Computers & Mathematics with Applications
Pages
3099-3109
Date Issued
2010
Date
2010
Author(s)
Dang, Jr-Fong
Abstract
The conventional precision-based decision analysis methodology is invalid for business decision analysis when precise assessment data seldom exist. This paper considers the Cournot game with fuzzy demand and fuzzy costs that are assumed to be triangular fuzzy numbers. Our model utilizes the weighted center of gravity (WCoG) method to defuzzify the fuzzy profit function into a crisp value. We derive the equilibrium Cournot quantity of each firm by simultaneously solving the first-order condition of each firm. Our model explicitly derives the necessary condition to avoid an unreasonable outcome of negative equilibrium quantities and lack of flexibility for modification of the ranking method. In addition, we examine the standard deviation of the fuzzy profit resulting from the fuzziness of each firm's cost and market demand functions. We conduct sensitivity analysis to investigate the effect of parameter perturbations on firms' outcomes. The results indicate that the center of parameter plays an important role in sensitivity analysis and dominates over variations in equilibrium quantity due to a perturbation of fuzzy parameters. © 2010 Elsevier Ltd. All rights reserved.
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journal article
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