Winner determination of loss-averse buyers with incomplete information in multiattribute reverse auctions for clean energy device procurement. (15th June 2019)

• Record Type: Journal Article
• Authors: Qian, Xiaohu; Fang, Shu-Cherng; Huang, Min; Wang, Xingwei
• Is Part Of: Energy. Volume 177(2019)
• Page Start: 276
• Page End: 292
• Publication Date: 2019-06-15
• Subjects: Clean energy market -- Reverse auction -- Multi-attribute decision making -- Incomplete information -- Winner determination -- Loss aversion; Power resources -- Periodicals; Power (Mechanics) -- Periodicals; Energy consumption -- Periodicals; 333.7905
• DOI: 10.1016/j.energy.2019.04.072
• Languages: English
• ISSNs: 0360-5442

Abstract

Abstract: Clean energy is an important source to mitigate the pressure of resources shortage and environmental effects. While multiattribute reverse auction is frequently adopted for the procurement efficiency of clean energy devices, the associated winner determination problem is explicitly studied for a utility company/buyer to select the most appropriate supplier in the clean energy market. Considering the buyer's loss-averse behavior with incomplete information and suppliers' conflicting attributes in different types evaluated by multiple experts, we incorporate an I U L O W A f (induced uncertain linguistic ordered weighted averaging) operator and a revised TODIM (an acronym in Portuguese of Interactive and Multi-attribute Decision Making) measure that is consistent with prospect theory into the "benefits, opportunities, costs and risks" (BOCR) framework to develop a novel BOCR-uRTODIM solution method for multi-attribute decision making. Numerical experiments illustrate the effectiveness and robustness of the proposed method by comparing it with some known methods. An interesting result indicates that the risk aversion degree of the buyer increases as the variance of suppliers' attributes expands. The BOCR-uRTODIM could be a useful tool for utility companies to avoid losses and for associated suppliers to improve their attributes for a win in the clean energy industry. Highlights: Reverse auction for the clear energy device procurement is studied. Utility companies' loss-averse behavior and incomplete information are considered. Prospect theory is integrated into analytic hierarchy process for decision making. A novel, effective, and robust method is proposed for determining the winner. Managerial insights are drawn for utility companies in the clean energy industry.