Decision-making for civil infrastructure exposed to low-probability, high-consequence hazards: The role of risk-aversion

Eun Jeong Cha, B. R. Ellingwood

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

The assessment of risk to civil infrastructure has two components: probability of a potentially damaging event and consequence of damage, measured in terms of financial or human losses. Deci-sion models that have been developed and implemented during the past three decades take into account the probabilistic aspect rationally, but address decision-maker attitudes toward risk only to a limited degree. The application of such models to decisions involving low-probability, high-consequence events affecting civil infrastructure requires a fundamental understanding of risk acceptance attitudes and how they affect individual and group choices. The phenomenon of risk aversion may be a significant factor in decisions for civil infrastructure exposed to low-probability events with high consequences, such as earthquakes, hurricanes or floods. This paper utilizes cumulative prospect theory to investigate characteristics of risk-aversion that can be inferred from risk pricing techniques in the insurance industry and explores the role of risk-aversion in assurance of structural safety.

Original languageEnglish (US)
Title of host publicationApplications of Statistics and Probability in Civil Engineering -Proceedings of the 11th International Conference on Applications of Statistics and Probability in Civil Engineering
Pages840-847
Number of pages8
StatePublished - Dec 1 2011
Externally publishedYes
Event11th International Conference on Applications of Statistics and Probability in Civil Engineering, ICASP - Zurich, Switzerland
Duration: Aug 1 2011Aug 4 2011

Publication series

NameApplications of Statistics and Probability in Civil Engineering -Proceedings of the 11th International Conference on Applications of Statistics and Probability in Civil Engineering

Other

Other11th International Conference on Applications of Statistics and Probability in Civil Engineering, ICASP
CountrySwitzerland
CityZurich
Period8/1/118/4/11

ASJC Scopus subject areas

  • Civil and Structural Engineering
  • Statistics and Probability

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