Global Changes: Facets of Robust Decisions

Ermoliev, Y. & Hordijk, L. (2006). Global Changes: Facets of Robust Decisions. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-06-001

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Abstract

The aim of this paper is to provide an overview of existing concepts of robustness and to identify promising directions for coping with uncertainty and risks of global changes. Unlike statistical robustness, general decision problems may have rather different facets of robustness. In particular, a key issue is the sensitivity with respect to low-probability catastrophic events. That is, robust decisions in the presence of catastrophic events are fundamentally different from decisions ignoring them. Specifically, proper treatment of extreme catastrophic events requires new sets of feasible decisions, adjusted to risk performance indicators, and new spatial, social and temporal dimensions. The discussion is deliberately kept at a level comprehensible to a broad audience through the use of simple examples that can be extended to rather general models. In fact, these examples often illustrate fragments of models that are being developed at IIASA.

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