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Inspections To Avert Terrorism: Robustness Under Severe Uncertainty

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Author Info

  • L. Joe Moffitt

    ()
    (Department of Resource Economics, University of Massachusetts Amherst)

  • John K. Stranlund

    ()
    (Department of Resource Economics, University of Massachusetts Amherst)

  • Barry C. Field

    ()
    (Department of Resource Economics, University of Massachusetts Amherst)

Abstract

Protecting against terrorist attacks requires making decisions in a world in which attack probabilities are largely unknown. The potential for very large losses encourages a conservative perspective, in particular toward decisions that are robust. But robustness, in the sense of assurance against extreme outcomes, ordinarily is not the only desideratum in uncertain environments. We adopt Yakov Ben-Haim’s (2001b) model of information gap decision making to investigate the problem of inspecting a number of similar targets when one of the targets may be attacked, but with unknown probability. We apply this to a problem of inspecting a sample of incoming shipping containers for a terrorist weapon. While it is always possible to lower the risk of a successful attack by inspecting more vessels, we show that robustness against the failure to guarantee a minimum level of expected utility might not be monotonic. Robustness modeling based on expected utility and incorporating inspection costs yields decision protocols that are a useful alternative to traditional risk analysis.

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File URL: http://courses.umass.edu/resec/workingpapers/documents/resecworkingpaper2005-3.pdf
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Bibliographic Info

Paper provided by University of Massachusetts Amherst, Department of Resource Economics in its series Working Papers with number 2005-3.

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Length: 21 pages
Date of creation: Mar 2005
Date of revision:
Handle: RePEc:dre:wpaper:2005-3

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Web page: http://www.umass.edu/resec/
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Related research

Keywords: Terrorism; Robustness; Severe Uncertainty; Port Security;

This paper has been announced in the following NEP Reports:

References

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  1. Kelsey, D., 1991. "Choice Under Partial Uncertainty," Discussion Papers 91-19, Department of Economics, University of Birmingham.
  2. Hadar, Josef & Russell, William R, 1969. "Rules for Ordering Uncertain Prospects," American Economic Review, American Economic Association, vol. 59(1), pages 25-34, March.
  3. Hadar, Josef & Russell, William R., 1971. "Stochastic dominance and diversification," Journal of Economic Theory, Elsevier, vol. 3(3), pages 288-305, September.
  4. Ouchi, Fumika, 2004. "A literature review on the use of expert opinion in probabilistic risk analysis," Policy Research Working Paper Series 3201, The World Bank.
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Citations

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Cited by:
  1. Wieck, Christine & Rudloff, Bettina, 2007. "The Bioterrorism Act of the USA and international food trade: evaluating WTO conformity and effects on bilateral imports," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 56(3).
  2. John K. Stranlund & Yakov Ben-Haim, 2006. "Price-Based vs. Quantity-Based Environmental Regulation under Knightian Uncertainty: An Info-Gap Robust Satisficing Perspective," Working Papers 2006-1, University of Massachusetts Amherst, Department of Resource Economics.
  3. Q. Farooq Akram & Yakov Ben-Haim & Øyvind Eitrheim, 2006. "Managing uncertainty through robust-satisficing monetary policy," Working Paper 2006/10, Norges Bank.
  4. John K. Stranlund & Barry C. Field, 2006. "On the Production of Homeland Security Under True Uncertainty," Working Papers 2006-5, University of Massachusetts Amherst, Department of Resource Economics.

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