Exploring Financial Decision-Making Approaches for Use in Earthquake Risk Decision Processes for Ports
Publication: Journal of Infrastructure Systems
Volume 15, Issue 4
Abstract
One of the main topics in the Georgia Tech/NEES Grand Challenge project “Seismic Risk Mitigation for Port Systems” is the evaluation of seismic risk management approaches for ports. One subtopic of this main topic is the re-evaluation of pertinent financial risk and decision procedures for assessing seismic risk-reduction measures. In light of many criticisms of benefit-cost and least mean total cost methods, previous port seismic risk and decision procedures have benefited from the application of the mean-variance criterion. However, serious objections have been posed to the use of the mean-variance criterion so that exploration of stochastic dominance methods is encouraged. This paper outlines these methods in terms of simplifying nonparametric and upper-order statistics. Focusing on the tails of total cost distributions, this paper shows the value of these methods, but also the value of using almost stochastic dominance when strict stochastic methods fail.
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Acknowledgments
This work was partially funded under Subcontract No. E-20-L05-S2 under NSF Prime Contract No. NSFCMS-0530478. We thank three reviewers, Shivang Desai, graduate student at the University of Southern California, Dr. Brian O’Rourke and Dr. Rick Murnane of Baseline Management Company, Zhenghui Hu, Imagecat, Inc., Professor Adam Rose at the University of Southern California, and Professor Levy. We alone though are responsible for the contents herein.
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Information
Published In
Journal of Infrastructure Systems
Volume 15 • Issue 4 • December 2009
Pages: 406 - 416
Copyright
© 2009 ASCE.
History
Received: May 6, 2008
Accepted: May 7, 2009
Published online: Nov 13, 2009
Published in print: Dec 2009
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