Allocation strategy based on prospect theory for power supplier

Power allocation into decision-making model plays a valuable role for the power supply company to mitigate price risks and improve their profitability in electricity market environment. In this paper, we develop a power allocation model based on the prospect theory, which considers the psychological factors of decision-making in reality, through calculating the value of electricity purchasing business function and weighting function retrieves the maximum number of prospects for the utility as the optimal allocation scheme. The results show that the risk preferences of the real decision makers will change along with the psychological expectations, the power allocation strategy is more conform to the actual decision model of decision-makers compared with the traditional power allocation model.