Competitive supply behavior when price information is fuzzy

The theory of fuzzy sets is applied to the output decisions of a price-taki ng firm facing imprecise information about expected future prices. Acceptin g risk resulting from the randomness of prices, the manager is interested i n expected profits only. Since the set of possible expected-price vectors i s fuzzy, a suitable defuzzification strategy is defined in analogy to the p essimism-optimism index proposed by L. Hurwicz. It depends on the manager's willingness to accept "surprises" resulting from a deviation of the true e xpected prices from the values that guided output decisions. Despite a line ar cost function, well specified solutions to the optimization problem are possible without resorting to capacity constraints.