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December 2009 The utility of reliability and survival
Nozer D. Singpurwalla
Ann. Appl. Stat. 3(4): 1581-1596 (December 2009). DOI: 10.1214/09-AOAS272

Abstract

Reliability (survival analysis, to biostatisticians) is a key ingredient for making decisions that mitigate the risk of failure. The other key ingredient is utility. A decision theoretic framework harnesses the two, but to invoke this framework we must distinguish between chance and probability. We describe a functional form for the utility of chance that incorporates all dispositions to risk, and propose a probability of choice model for eliciting this utility. To implement the model, a subject is asked to make a series of binary choices between gambles and certainty. These choices endow a statistical character to the problem of utility elicitation. The workings of our approach are illustrated via a live example involving a military planner. The material is general because it is germane to any situation involving the valuation of chance.

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Nozer D. Singpurwalla. "The utility of reliability and survival." Ann. Appl. Stat. 3 (4) 1581 - 1596, December 2009. https://doi.org/10.1214/09-AOAS272

Information

Published: December 2009
First available in Project Euclid: 1 March 2010

zbMATH: 1185.62177
MathSciNet: MR2752148
Digital Object Identifier: 10.1214/09-AOAS272

Keywords: Choice models , decision making , Probability , propensity , quality of life , risk analysis

Rights: Copyright © 2009 Institute of Mathematical Statistics

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Vol.3 • No. 4 • December 2009
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