Accession Number : ADA591458


Title :   Engineering Decisions Under Risk-Averseness


Corporate Author : NAVAL POSTGRADUATE SCHOOL MONTEREY CA DEPT OF OPERATIONS RESEARCH


Personal Author(s) : Rockafellar, R T ; Royset, Johannes O


Full Text : https://apps.dtic.mil/dtic/tr/fulltext/u2/a591458.pdf


Report Date : 13 Dec 2013


Pagination or Media Count : 29


Abstract : Engineering decisions are invariably made under substantial uncertainty about current and future system cost and response, including cost and response associated with low-probability, highconsequence events. A risk-neutral decision maker would rely on expected values when comparing designs, while a risk-averse decision maker might adopt nonlinear utility functions or failure probability criteria. The paper shows that these models for making decisions fall within a framework of risk measures that includes many other possibilities. General recommendations for selecting risk measures lead to decision models for risk-averse decision making that comprehensively represent risks in engineering systems, avoid paradoxes, and accrue substantial benefits in subsequent risk, reliability, and cost optimization.


Descriptors :   *DECISION MAKING , *ENGINEERING , *RISK , *UNCERTAINTY , COHERENCE , COSTS , FAILURE , OPTIMIZATION , PROBABILITY , PROBABILITY DENSITY FUNCTIONS , RANDOM VARIABLES , RELIABILITY


Subject Categories : Administration and Management
      Operations Research
      Civil Engineering


Distribution Statement : APPROVED FOR PUBLIC RELEASE