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Decisions That Affect Outcomes in the Distant Future.
STANFORD UNIV CA DEPT OF ENGINEERING ECONOMIC SYSTEMS
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The question that this research addresses is how decisions involving many citizens should be made when those decisions affect outcomes in the distant future. Distant means beyond the lifetimes of individuals alive now. The decision maker might be either a private company or a public agency. The contribution of this research is a comprehensive methodology for decision making in this situation, including a mathematical theory and techniques for assessing the required information. The approach that is taken is a synthesis of concepts from economics with techniques for handling time preferences and uncertain outcomes from the theory of decision analysis. The result is a methodology for deciding whether to accept or reject individual projects with uncertain outcomes on future generations. The fundamental basis for decision making is the amount that current citizens are willing to pay for outcomes accuring to other individuals would pay for a project. The expressions include a wide range of realistic cases, such as non-expected-value preferences, uncertainty in individuals lifetimes, and outcomes accuring to others in the same generation as well as others in the future.
APPROVED FOR PUBLIC RELEASE