da4 - Engineering Risk Benefit Analysis 1.155 2.943 3.577...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
DA 4. Introduction to Utility 1 Engineering Risk Benefit Analysis 1.155, 2.943, 3.577, 6.938, 10.816, 13.621, 16.862, 22.82, ESD.72, ESD.721 DA 4. Introduction to Utility George E. Apostolakis Massachusetts Institute of Technology Spring 2007
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
DA 4. Introduction to Utility 2 The Concept of utility Utility of a consequence: A quantification of a person's relative preference for that consequence A simple extension of the indifference probability (or "preference value") concept (Axiom 2a) Utility function: Expresses a person's relative preferences among a set of consequences (often defined over a continuous range)
Background image of page 2
DA 4. Introduction to Utility 3 Axiom 2a: Quantification of preferences For each C i , the DM can specify a number π (C i ), with 0 ≤π (C i ) 1, such that the DM is indifferent between ¾ possessing C i with certainty and ¾ possessing the lottery L (C*, C * ; π (C i ), 1 - π (C i ))
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
DA 4. Introduction to Utility 4 Schematic representation C * C * π (C 1 ) 1−π 1 ) C * C * π 2 ) 1−π 2 ) C * C * π m ) 1−π m ) p m p 2 p 1 ~ C 1 C 2 C m p m p 2 p 1
Background image of page 4
DA 4. Introduction to Utility 5 Preference measures for lotteries Having established the relative preferences, i.e., the π (C i ), i = 1,…,m, we can derive the relative preferences for lotteries.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 18

da4 - Engineering Risk Benefit Analysis 1.155 2.943 3.577...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online