Risk-based decision analysis in support of precautionary policies

Michael L. Dekay, Mitchell J. Small, Paul S. Fischbeck, Robert Farrow, Alison Cullen, Joseph B. Kadane, Lester Lave, M. Granger Morgan and Kazuhisa Takemura

Journal of Risk Research, 2002, vol. 5, issue 4, 391-417

Abstract: A decision-analytic model for avoiding a risky activity is presented. The model considers the benefit and cost of avoiding the activity, the probability that the activity is unsafe, and scientific tests or studies that could be conducted to revise the probability that the activity is unsafe. For a single decision maker, thresholds are identified for his or her current subjective probability that the activity is unsafe. These thresholds indicate whether the preferred course of action is avoiding the activity without further study, engaging in the activity without further study, or conducting a test or research programme to obtain additional information and following the result. When these thresholds are low, precautionary action is more likely to be warranted. When there are multiple stakeholders, differences in their perceptions of the benefit and cost of avoidance and differences in their perceptions of the accuracy of the additional information provided by the test or research programme combine to create differences in their decision thresholds. Thus, the model allows for the rational expression of differences among parties in a way that highlights disagreements and possible paths to conflict resolution. The model is illustrated with an application to phytosanitary standards in international trade and examined in terms of recent empirical research on lay perceptions of risks, benefits, and trust. Further research is suggested to improve the elicitation of model components, as a way of fostering the legitimate application of risk-based decision analysis in precautionary policy making.

Date: 2002
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DOI: 10.1080/13669870210166202

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