Research On The Risk Of The PPP Sewage Project Based On The Cumulative Prospect Theory

In the research of project risk analysis and decision making, a number of scholars have carried out qualitative and quantitative research, but most of these studies are based on the assumption of complete rational people. These studies tend to be too rational to ignore the uncertainties in the actual operation of the project, and characteristics of decision makers in project team, simple pursuit of utility maximization. However, the famous Ellsberg paradox proves that decision makers in real life cannot be completely rational. The final decision result is influenced by the factors such as experience, experience and personality. In this case, more and more scholars make a risk decision based on the incomplete rational people. The Nobel Prize winner Kahneman and Tversky proposed the Prospect Theory is the most influential, the cumulative prospect theory is derived on this basis.Prospect Theory is a fusion of Economics, Behavioral science, Management Science and other discipline. The Prospect Theory takes into account the factors that have not been considered in the theory of the complete rational hypothesis: decision maker psychological and behavior factor. The prospect theory can make a more accurate description and explanation of the decision making behavior of the decision makers in the uncertain situation. Now Prospect Theory is widely concerned by scholars in various disciplines. Cumulative Prospect Theory is the further development of the prospect theory. By modifying the decision function, a more realistic description of the decision making behavior can be made in the case of uncertainty.In this paper, a risk decision model is constructed based on the cumulative prospect theory, through the change of the reference point and the model parameters, it is to analyze how different risk decision makers face the same situation. Traditional research on the risk allocation of sewage treatment PPP project is limited to qualitative analysis and research, cannot give the public sector and private sector risk sharing to be clear guidance because of the lack of actual quantitative. On the basis of the model construction and the use of software risk simulation, risk sharing of the project through risk sensitivity analysis.the cumulative prospect theory is applied to the risk decision of wastewater treatment project, regard the decision maker as the limited rational person. Based on cumulative prospect theory, the risk in the future sewage treatment project construction operation can be more in line with the actual situation analysis.At the same time, this study introduces the cumulative prospect theory. Based on the consideration of the optimal decision making under risk, the risk decision model of bounded rationality is constructed. This can explain decision maker how to make the most satisfied decision under the condition of risk. This can improve the scientific and accuracy of decision making, making the decision more realistic, and can effectively guide the practical decision.