Qualitative information modeling: The role of fuzzy logic in project economic evaluations
Conventional models rely on a precise mathematical formalism to express the quantitative essentials of the system being modeled. In contrast, decisionmakers in the real world employ cognitive skills to process information and arrive at decisions based on judgement and experience. Bridging the gap between the two analytic approaches -- that is, formulating intelligent models -- has met with very limited success using traditional computational methods. The difficulty stems from two problems. First, imprecision, which is the distinguishing feature of qualitative factors, is an information attribute that is not easily computable using the rules of traditional set theory and Boolean (bivalent) logic. Second, cognitive information processing is cumbersome using the numerical rule-based approaches common in today`s expert systems. Fuzzy models overcome these problems by employing new mathematical rules for expressing and processing knowledge. These rules are based on fuzzy logic. Fuzzy logic is the formal symbolic language used to represent linguistic terms and verbal rules for computational and modeling purposes. This language provides model builders with the means to incorporate subjective judgements, imprecise information, and human reasoning capabilities as part of a model`s framework. This paper outlines the concepts needed to understand fuzzy modeling systems. The key concepts discussed include fuzzy sets, fuzzy logical operators, linguistic variables, and verbal rules. A simple fuzzy economic rating model for project investments is presented to demonstrate the fuzzy modeling technique. Finally, the paper discusses the role of fuzzy logic in the economic modeling process.
- Research Organization:
- International Association for Energy Economics, Cleveland, OH (United States)
- OSTI ID:
- 416339
- Report Number(s):
- CONF-9507139-; TRN: 96:006517-0034
- Resource Relation:
- Conference: 18. International Association for Energy Economics (IAEE) international conference, Washington, DC (United States), 5-8 Jul 1995; Other Information: PBD: 1995; Related Information: Is Part Of Into the Twenty-First Century: Harmonizing energy policy, environment, and sustainable economic growth. Proceedings; PB: 528 p.
- Country of Publication:
- United States
- Language:
- English
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