Computer Engineering Commons^™

Optimizing Computer Representation And Computer Processing Of Epistemic Uncertainty For Risk-Informed Decision Making: Finances Etc., Vladik Kreinovich, Nitaya Buntao, Olga Kosheleva

Departmental Technical Reports (CS)

Uncertainty is usually gauged by using standard statistical characteristics: mean, variance, correlation, etc. Then, we use the known values of these characteristics (or the known bounds on these values) to select a decision. Sometimes, it becomes clear that the selected characteristics do not always describe a situation well; then other known (or new) characteristics are proposed. A good example is description of volatility in finance: it started with variance, and now many descriptions are competing, all with their own advantages and limitations.

In such situations, a natural idea is to come up with characteristics tailored to specific application areas: e.g., …