REDUCING ADVERSE SELECTION BY FUZZY CHOICES

I. Georgescu and X. Qiu

Keywords

Adverse selection, fuzzy choice function, fuzzy revealed preference, multiple criteria decision making

Abstract

In this paper we propose a theoretical model, based on the ranking of alternatives according to fuzzy choices, of multicriteria decision making for one buyer and several sellers. Here the criteria of choice are derived from the partial information existing in the model. These criteria are represented by fuzzy available sets of alternatives. Differing from other possible solutions, our model tries, by interpreting the vectors that contain the partial information (=qualitative) as criteria for the buyers in decision making and by combining it with the certain information existing in the model, to correct the adverse selection that appears as the result of asymmetric information between buyers and sellers.

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