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A General, Analytic Method for Generating Robust Strategies and Narrative Scenarios

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Author Info

  • Robert J. Lempert

    ()
    (RAND Corporation, 1776 Main Street, P.O. Box 2138, Santa Monica, California 90407)

  • David G. Groves

    ()
    (RAND Corporation, 1776 Main Street, P.O. Box 2138, Santa Monica, California 90407)

  • Steven W. Popper

    ()
    (RAND Corporation, 1776 Main Street, P.O. Box 2138, Santa Monica, California 90407)

  • Steve C. Bankes

    ()
    (RAND Corporation, 1776 Main Street, P.O. Box 2138, Santa Monica, California 90407)

Registered author(s):

    Abstract

    Robustness is a key criterion for evaluating alternative decisions under conditions of deep uncertainty. However, no systematic, general approach exists for finding robust strategies using the broad range of models and data often available to decision makers. This study demonstrates robust decision making (RDM), an analytic method that helps design robust strategies through an iterative process that first suggests candidate robust strategies, identifies clusters of future states of the world to which they are vulnerable, and then evaluates the trade-offs in hedging against these vulnerabilities. This approach can help decision makers design robust strategies while also systematically generating clusters of key futures interpretable as narrative scenarios. Our study demonstrates the approach by identifying robust, adaptive, near-term pollution-control strategies to help ensure economic growth and environmental quality throughout the 21st century.

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    File URL: http://dx.doi.org/10.1287/mnsc.1050.0472
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 52 (2006)
    Issue (Month): 4 (April)
    Pages: 514-528

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    Handle: RePEc:inm:ormnsc:v:52:y:2006:i:4:p:514-528

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    Related research

    Keywords: decision making under uncertainty; robust decision making; deep uncertainty; adaptive planning; scenario planning;

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    Citations

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    Cited by:
    1. Firas H. Al-Hammadany & Almas Heshmati, 2011. "Analysis of the Purpose of Using Internet in Iraq: A Multinomial Logit Model," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(6), pages 41, October.
    2. McJeon, Haewon C. & Clarke, Leon & Kyle, Page & Wise, Marshall & Hackbarth, Andrew & Bryant, Benjamin P. & Lempert, Robert J., 2011. "Technology interactions among low-carbon energy technologies: What can we learn from a large number of scenarios?," Energy Economics, Elsevier, vol. 33(4), pages 619-631, July.
    3. Durbach, Ian N. & Stewart, Theodor J., 2012. "Modeling uncertainty in multi-criteria decision analysis," European Journal of Operational Research, Elsevier, vol. 223(1), pages 1-14.
    4. M. Ward & Casey Brown & Kye Baroang & Yasir Kaheil, 2013. "Reservoir performance and dynamic management under plausible assumptions of future climate over seasons to decades," Climatic Change, Springer, vol. 118(2), pages 307-320, May.
    5. Klibi, Walid & Martel, Alain, 2012. "Scenario-based Supply Chain Network risk modeling," European Journal of Operational Research, Elsevier, vol. 223(3), pages 644-658.
    6. Stephen C. Smith & Arun S. Malik, 2012. "Adaptation to Climate Change in Low-Income Countries: Lessons from Current Research and Needs from Future Research," Working Papers 2012-8, The George Washington University, Institute for International Economic Policy.
    7. van der Weijde, Adriaan Hendrik & Hobbs, Benjamin F., 2012. "The economics of planning electricity transmission to accommodate renewables: Using two-stage optimisation to evaluate flexibility and the cost of disregarding uncertainty," Energy Economics, Elsevier, vol. 34(6), pages 2089-2101.
    8. Barbose, Galen & Wiser, Ryan & Phadke, Amol & Goldman, Charles, 2008. "Managing carbon regulatory risk in utility resource planning: Current practices in the Western United States," Energy Policy, Elsevier, vol. 36(9), pages 3300-3311, September.
    9. Susan Stratton Sayre & Rachel Goodhue & Leo Simon, . "Probabilistic Political Viability: A Methodology for Predictive Political Economy," Working Papers 2012-01, Smith College, Department of Economics.
    10. Canetta, Luca & Cheikhrouhou, Naoufel & Glardon, Rémy, 2013. "Modelling hybrid demand (e-commerce “+” traditional) evolution: A scenario planning approach," International Journal of Production Economics, Elsevier, vol. 143(1), pages 95-108.
    11. Lempert, Robert & Kalra, Nidhi & Peyraud, Suzanne & Mao, Zhimin & Tan, Sinh Bach & Cira, Dean & Lotsch, Alexander, 2013. "Ensuring robust flood risk management in Ho Chi Minh city," Policy Research Working Paper Series 6465, The World Bank.
    12. Simon Dietz & Samuel Fankhauser, 2009. "Environmental prices, uncertainty and learning," LSE Research Online Documents on Economics 37613, London School of Economics and Political Science, LSE Library.
    13. Stéphane Hallegatte & Fanny Henriet & Jan Corfee-Morlot, 2008. "The Economics of Climate Change Impacts and Policy Benefits at City Scale: A Conceptual Framework," OECD Environment Working Papers 4, OECD Publishing.
    14. Elmar Kriegler & Brian-C O'Neill & Stéphane Hallegatte & Tom Kram & Richard-H Moss & Robert Lempert & Thomas J Wilbanks, 2010. "Socio-economic Scenario Development for Climate Change Analysis," Working Papers hal-00866437, HAL.
    15. Robert Lempert, 2013. "Scenarios that illuminate vulnerabilities and robust responses," Climatic Change, Springer, vol. 117(4), pages 627-646, April.
    16. Simon Dietz & Samuel Fankhauser, 2009. "Environmental prices, uncertainty and learning," Grantham Research Institute on Climate Change and the Environment Working Papers 10, Grantham Research Institute on Climate Change and the Environment.
    17. Hallegatte, Stephane & Shah, Ankur & Lempert, Robert & Brown, Casey & Gill, Stuart, 2012. "Investment decision making under deep uncertainty -- application to climate change," Policy Research Working Paper Series 6193, The World Bank.
    18. repec:gwi:wpaper:2012-08 is not listed on IDEAS
    19. Robert Lempert & Shawn McKay, 2011. "Some thoughts on the role of robust control theory in climate-related decision support," Climatic Change, Springer, vol. 107(3), pages 241-246, August.

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