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    <abstract>This paper presents a decision theoretic model which was developed to aid regulatory agencies in standard setting and regulation tasks. The one stage three decision maker model encompasses the decision making of a regulator, a developer, and an impactee unit. Each decision unit is assumed to follow a basic decision model, which is a combination of a probability model, a difference value judgment model, and an expected utility model. The developer unit is linked to the regulator unit through possible detections of violations of a regulation and sanctions. The impactee unit is linked to the developer unit through pollution generating events stemming from the developer&apos;s actions, and the subsequent damages which may result from pollution. 

This basic regulation model is then specified to safety and emission standard setting. Central in these specifications is a signal detection model which characterizes the uncertainty with which the regulator will detect or miss violations of his regulation. A multistage conditional probability model links the developer&apos;s actions, pollution generating events, amounts of pollutants, and possible effects on impactees.</abstract>
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