Bayesian framework for managing preferences in decision-making

Marc A. Maes and Michael H. Faber

Reliability Engineering and System Safety, 2006, vol. 91, issue 5, 556-569

Abstract: A rational decision-making process does not exclude the possibility of decision makers expressing different preferences and disagreeing regarding the effects of consequences and optimal course of actions. This point of view is explored in depth in this paper. A framework is developed that includes several decision makers (instead of just one) and allows for the variability of preferences among these decision makers. The information provided by the varying opinions of decision makers can be used to optimize our own decision-making. To achieve this, likelihood functions are developed for stated preferences among both discrete and continuous alternatives, and stated preference rankings of alternatives. Two applications are pursued: the optimization of the lifecycle utility of a structural system subject to consequences of failure proportional to the intensity of hazards exceeding a variable threshold, and to follow-up consequences. Also, the problem of tight decisions or close calls is investigated in order to explore the efficiency of a Bayesian approach using stated preferences and stated rankings.

Keywords: Preference modeling; Utility; Consequences; Bayesian decision-making; Expert solicitation (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reensy:v:91:y:2006:i:5:p:556-569

DOI: 10.1016/j.ress.2005.04.003

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