An age replacement policy via the Bayesian method

Sheu, Shey‐Huei; Chiu, Chaun-Hung; Hsu, Tsung‐Shin

doi:10.1080/00207720903576480

Cited by 6 publications

(1 citation statement)

References 26 publications

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“…As another example, if the failure rate of components in a large batch (e.g., for bolts in a bridge) increases with age, then an optimal risk management strategy (minimizing the sum of replacement, deterioration, and failure costs over a time horizon, or per unit time) is often very simple: wait until the components reach a certain age, and then replace them all. ( 11 ) Other optimized screening, inspection, and intervention scheduling policies for managing risks are routinely used in medicine (e.g., age‐specific cancer screening tests), and in reliability and industrial engineering. Such simple and effective time‐based risk assessment and risk management tactics are unavailable for rare and catastrophic events in SOC systems with exponentially distributed interoccurrence times, since the passage of time in these systems provides no information about when the next catastrophe is likely to occur.…”

Section: Challenges Of Rare Catastrophic Events To Traditional Anamentioning

confidence: 99%

Community Resilience and Decision Theory Challenges for Catastrophic Events

Cox¹

2012

Risk Analysis

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Extreme and catastrophic events pose challenges for normative models of risk management decision making. They invite development of new methods and principles to complement existing normative decision and risk analysis. Because such events are rare, it is difficult to learn about them from experience. They can prompt both too little concern before the fact, and too much after. Emotionally charged and vivid outcomes promote probability neglect and distort risk perceptions. Aversion to acting on uncertain probabilities saps precautionary action; moral hazard distorts incentives to take care; imperfect learning and social adaptation (e.g., herd-following, group-think) complicate forecasting and coordination of individual behaviors and undermine prediction, preparation, and insurance of catastrophic events. Such difficulties raise substantial challenges for normative decision theories prescribing how catastrophe risks should be managed. This article summarizes challenges for catastrophic hazards with uncertain or unpredictable frequencies and severities, hard-to-envision and incompletely described decision alternatives and consequences, and individual responses that influence each other. Conceptual models and examples clarify where and why new methods are needed to complement traditional normative decision theories for individuals and groups. For example, prospective and retrospective preferences for risk management alternatives may conflict; procedures for combining individual beliefs or preferences can produce collective decisions that no one favors; and individual choices or behaviors in preparing for possible disasters may have no equilibrium. Recent ideas for building "disaster-resilient" communities can complement traditional normative decision theories, helping to meet the practical need for better ways to manage risks of extreme and catastrophic events.

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Section: Challenges Of Rare Catastrophic Events To Traditional Anamentioning

confidence: 99%