Generalised Risk Constraints in Decision Trees with Second-Order Probabilities
2012 (English)In: Advances in Economics, Risk Management, Political and Law Science: Proceedings of the 1st WSEAS International Conference on Economics, Political and Law Science (EPLS '12). Proceedings of the 1st WSEAS International Conference on Risk Management, Assessment and Mitigation (RIMA '12) / [ed] D. Pavelkova, J. Strouhal, M. Pasekova, World Scientific and Engineering Academy and Society, 2012, 376-383 p.Conference paper (Refereed)
Recently, representations and methods analysing decision problems where probabilities and values (utilities) are associated with belief distributions over them (second order representations) have been suggested. Inthis paper we present an approach to how imprecise information can be modelled by means of second-order distri-butions and how a risk evaluation process can be elaborated by integrating procedures for numerically impreciseprobabilities and utilities. We discuss some shortcomings in the use of the principle of maximising the expectedutility and of utility theory in general, and offer remedies by the introduction of supplementary decision rules basedon a concept of risk constraints taking advantage of second-order distributions.
Place, publisher, year, edition, pages
World Scientific and Engineering Academy and Society, 2012. 376-383 p.
, Business and Economics Series, ISSN 2227-460X ; 2
Decision analysis, risk analysis, interval probability, second-order probability, decision rule, utility theory
Research subject Computer and Systems Sciences
IdentifiersURN: urn:nbn:se:su:diva-84865ISBN: 978-1-61804-123-4OAI: oai:DiVA.org:su-84865DiVA: diva2:581625
EPLS '12 and RIMA '12, Tomas Bata University in Zlin, Czech Republic September 20-22, 2012