Decision-Analysis under Extreme Uncertainties- Evaluating Unusual Weathers Caused by Global Warming

Tamura, H., Kitamura, H., Hatono, I., & Umano, M. (1995). Decision-Analysis under Extreme Uncertainties- Evaluating Unusual Weathers Caused by Global Warming. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-95-089

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Abstract

In this paper we propose a new methodology of decision analysis under extreme uncertainties which could analyze the preference of various type of persons from pessimistic ones to optimistic ones. For this purpose we revise a previous axiom of dominance for constructing a measurable value function (utility function) under uncertainty based on Dempster-Shafer theory of probability. The previous axiom of dominance has dealt with only the best and the worst results in the set element. Here, we propose a new axiom of dominance after defining the value of the set element taking into account the average of the value of all the results included in the set element. It is shown that we can construct a measurable value function under uncertainty for a pessimistic, an ordinary or an optimistic person, based on this new axiom of dominance. An example of evaluating the alternative policies to decrease the emission of carbon dioxide for avoiding global warming is included.

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