From Numerical Probabilities to Linguistic Probabilities: A Theoretical Justification of Empirical Granules Used in Risk Management

Abstract

In many risk management situations, instead of the exact probability values, specialists use a granule to which this probability belongs. Specifically, they use five granules, corresponding to thresholds 10%, 40%, 60%, and 90%. In this paper, we provide an explanation for such non-uniform granulation