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Inspections To Avert Terrorism: Robustness Under Severe Uncertainty

  • 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)

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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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
Contact details of provider: Web page: http://www.umass.edu/resec/

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  1. Hadar, Josef & Russell, William R, 1969. "Rules for Ordering Uncertain Prospects," American Economic Review, American Economic Association, vol. 59(1), pages 25-34, March.
  2. Kelsey, David, 1993. "Choice under Partial Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(2), pages 297-308, May.
  3. 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.
  4. Hadar, Josef & Russell, William R., 1971. "Stochastic dominance and diversification," Journal of Economic Theory, Elsevier, vol. 3(3), pages 288-305, September.
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