Decision‐Making with Heterogeneous Sources of Information

Donald Richards and William D. Rowe

Risk Analysis, 1999, vol. 19, issue 1, 69-81

Abstract: In any model the values of estimates for various parameters are obtained from different sources each with its own level of uncertainty. When the probability distributions of the estimates are obtained as opposed to point values only, the measurement uncertainties in the parameter estimates may be addressed. However, the sources used for obtaining the data and the models used to select appropriate distributions are of differing degrees of uncertainty. A hierarchy of different sources of uncertainty based upon one's ability to validate data and models empirically is presented. When model parameters are aggregated with different levels of the hierarchy represented, this implies distortion or degradation in the utility and validity of the models used. Means to identify and deal with such heterogeneous data sourcesare explored, and a number of approaches to addressing this problem is presented. One approach, using Range/confidence Estimates coupled with an Information Value Analysis Process, is presented as an example.

Date: 1999
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https://doi.org/10.1111/j.1539-6924.1999.tb00390.x

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Persistent link: https://EconPapers.repec.org/RePEc:wly:riskan:v:19:y:1999:i:1:p:69-81

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