093049 (E12) Risk aversion with state-dependent preferences in the rank-dependent expected utility theory : Chiu H., The Geneva Papers on Risk and Insurance Theory, vol. 21, No 2, 1996, pp. 159–177

• Publisher: Elsevier Science
• Year: 1997
• Tongue: English
• Weight: 90 KB
• Volume: 20
• Category: Article
• ISSN: 0167-6687
• DOI: 10.1016/s0167-6687(97)89203-7

✦ Synopsis

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several carcinogens, these upper bounds are often summoned to estimate overall risk. This begs the question of whether a sum of upper bounds is itself a plausible estimate of overall risk. This question can be asked in two ways: whether the sum yields an improbable estimate of overall risk (that is, it is only remotely possible for the true sum of risks to match the sum of upper bounds), or whether the sum gives a misleading estimate (that is, is the true sum of risks likely to be very different from the sum of upper bounds). Analysis of four case studies shows that as the number of risk estimates increases, their sum becomes increasingly improbable, but not misleading. Though the overall risk depends on the independence, additivity, and number of risk estimates, as well as the shapes of the under lying risk distributions, sums of upper bounds provide useful information about the overall risk and can be adjusted downward to give a more plausible [perhaps probable] upper bound, or even a central estimate of overall risk.