Risks induced by extreme events are characterized by small or ambiguous probabilities, catastrophic losses, or windfall gains. Through a new functional, that mimics the restricted Bayes-Hurwicz criterion within the Choquet expected utility approach, it is possible to represent the decision-maker behavior facing both risky (large and reliable probability) and extreme (small or ambiguous probability) events. A new formalization of the precautionary principle (PP) is shown and a new functional, which encompasses both extreme outcomes and expectation of all the possible results for every act, is claimed.

Basili, M. (2006). A rational decision rule in facing extreme events. RISK ANALYSIS, 26, 1721-1728.

A rational decision rule in facing extreme events

BASILI, MARCELLO
2006

Abstract

Risks induced by extreme events are characterized by small or ambiguous probabilities, catastrophic losses, or windfall gains. Through a new functional, that mimics the restricted Bayes-Hurwicz criterion within the Choquet expected utility approach, it is possible to represent the decision-maker behavior facing both risky (large and reliable probability) and extreme (small or ambiguous probability) events. A new formalization of the precautionary principle (PP) is shown and a new functional, which encompasses both extreme outcomes and expectation of all the possible results for every act, is claimed.
Basili, M. (2006). A rational decision rule in facing extreme events. RISK ANALYSIS, 26, 1721-1728.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11365/7837
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