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Fuzzy grouping variables in economic analysis: A pilot study of a verification of a normative model for R&D alliances
School of Business and Management, Lappeenranta University of Technology, Lappeenranta, Finland.ORCID iD: 0000-0002-7402-0421
Palacký University, Olomouc, Faculty of Arts, Department of Applied Economics, Olomouc, Czech Republic.
Palacký University, Olomouc, Faculty of Arts, Department of Applied Economics, Olomouc, Czech Republic.
2016 (English)In: Fuzzy Economic Review, ISSN 1136-0593, Vol. 21, no 2, p. 19-46Article in journal (Refereed) Published
Abstract [en]

Many of the investments decisions facing with uncertainty can be characterized as real options problems. There is evidence of deviation from the predictions derived using such normative models. The proposed research sheds light on the importance of integrating normative models with experimental methods in order to predict and explain such cognitive limitations, in the particular context of R&D alliances. The focus is on appropriate validation of such models on experimental data. We propose a simple design starting from a real options model dealing with alliance timing decisions. We present the decision makers with risky choices formulated as abstract gambling decisions in order to assess their risk propensity and to validate the normative predictions of the model. This paper introduces the basic principles of the use of fuzzy grouping variables in economic analysis. On the survey data gathered to validate the predictive power of the presented model we show that fuzzy sets can be effectively used to partition the experimental data into fuzzy subsets for model verification (e.g. when subgroups cannot be defined in a crisp way). We compare the validation of the model on a full data set with a “refocused” validation on a fuzzy subset of the original sample.

Place, publisher, year, edition, pages
International Association for Fuzzy-Set Management and Economy , 2016. Vol. 21, no 2, p. 19-46
Keywords [en]
Behavioural decision theory, Fuzzy grouping variable, Model validation, R&D alliances, Real options
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-62576DOI: 10.25102/fer.2016.02.02Scopus ID: 2-s2.0-85052630354OAI: oai:DiVA.org:hj-62576DiVA, id: diva2:1801687
Available from: 2023-10-02 Created: 2023-10-02 Last updated: 2023-10-02Bibliographically approved

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Morreale, Azzurra

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CiteExportLink to record
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  • modern-language-association-8th-edition
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