Prospect theory on energy options? - Towards decision making under risk

Nature´s Real Estate such as water, minerals, oil & gas, and coal is the precious gift available for the welfare of mankind since time immemorial. In spite of the efforts initiated by many countries in the development of non-conventional energy resources, it is too early to visualize that the gap between supply and demand of energy could be bridged in the near future. With this backdrop, the policy makers are left with no other option but to rely on the development of suitable conventional energy resources and energy efficient technologies to meet the immediate needs. Major decisions such as selecting energy options for the country are made without advance knowledge of their consequences. In this sequel, we briefly describe the mathematical foundation of prospect theory - one of the theories in decision analysis, which aims at decision making under risk. Further, an illustrative example describing decision-making for the energy prospects (options) under risk is presented, and the paper ends on the scope for future research.