Citation

Basili M. Risk Anal. 2006; 26(6): 1721-1728.

Affiliation

Department of Economics, University of Siena, Piazza San Francesco 7 53100 Siena, Italy. basili@unisi.it

Copyright

(Copyright © 2006, Society for Risk Analysis, Publisher John Wiley and Sons)

DOI

10.1111/j.1539-6924.2006.00826.x

PMID

17184408

Abstract

Risks induced by extreme events are characterized by small or ambiguous probabilities, catastrophic losses, or windfall gains. Through a new functional, that mimics the restricted Bayes-Hurwicz criterion within the Choquet expected utility approach, it is possible to represent the decisionmaker behavior facing both risky (large and reliable probability) and extreme (small or ambiguous probability) events. A new formalization of the precautionary principle (PP) is shown and a new functional, which encompasses both extreme outcomes and expectation of all the possible results for every act, is claimed.

Language: en