Adversarial Decision Making in Counterterrorism Applications

Our main objective is to improve decision making in counterterrorism applications by implementing expected utility for prescriptive decision making and prospect theory for descriptive modeling. The areas that we aim to improve are behavioral modeling of adversaries with multi objectives in counterterrorism applications and incorporating risk attitudes of decision makers to risk matrices in assessing risk within an adversarial counterterrorism framework. Traditionally, counterterrorism applications have been approached on a single attribute basis. We utilize a multi-attribute prospect theory approach to more realistically model the attacker’s behavior, while using expected utility theory to prescribe the appropriate actions to the defender. We evaluate our approach by considering an attacker with multiple objectives who wishes to smuggle radioactive material into the United States and a defender who has the option to implement a screening process to hinder the attacker. Next, we consider the use of risk matrices (a method widely used for assessing risk given a consequence and a probability pairing of a potential threat) in an adversarial framework – modeling an attacker and defender risk matrix using utility theory and linking the matrices with the Luce model. A shortcoming with modeling the attacker and the defender risk matrix using utility theory is utility theory’s failure to account for the decision makers’ deviation from rational behavior as seen in experimental literature. We consider an adversarial risk matrix framework that models the attacker risk matrix using prospect theory to overcome this shortcoming, while using expected utility theory to prescribe actions to the defender

Testing the predective validity of the time trade-off and the Stardard Gamble

This paper tests the consistency of health utility measurements with individual preferences. We compare three methods, the time trade-off, the standard gamble and a version of the standard gamble that corrects for the deviations from expected utility modelled by prospect theory. Individual preferences are measured both through a ranking task and through a choice task. In decisions involving no risk the time trade-off is most consistent with people’s preferences with the standard gamble a close second. In decisions involving risk the corrected standard gamble is most consistent with people’s preferences. Our data do not support the common assumption in health economics that utility is transferable across decision contexts.Health utility measurement, QALYs,stardard gamble, time trade-off, prospect theory.

A language for the construction of preferences under uncertainty

This paper studies a target-based procedure to rank lotteries that is normatively and observationally equivalent to the expected utility model. In view of this equivalence, the traditional utility-based language for decision making may be substituted with an alternative target-based language. Switching language may have significant modelling consequences. To exemplify, we contrast the utility-based viewpoint of prospect theory against the target-based viewpoint and provide an explanation of Allais’ paradox based on context dependence instead of distorted probabilities.expected utility, prospect theory, target-based decisions, choice anomalies, benchmarking

Resolving inconsistencies in utility measurement under risk: Tests of generalizations of expected utility

This paper explores biases in the elicitation of utilities under risk and the contribution that generalizations of expected utility can make to the resolution of these biases. We used five methods to measure utilities under risk and found clear violations of expected utility. Of the theories studies, prospect theory was most consistent with our data. The main improvement of prospect theory over expected utility was in comparisons between a riskless and a risky prospect(riskless-risk methods). We observed no improvement over expected utility in comparisons between two risky prospects (risk-risk methods). An explanation why we found no improvement of prospect theory over expected utility in risk-risk methods may be that there was less overweighting of small probabilities in our study than has commonly been observed.Utility Measurement, Nonexpected Utility, Prospect Theory, Health., Leex

Models of Decision Making - Advantages and Drawbacks in Crisis Management

It has been shown that professional stress is underexamined when it comes to personnel management in crisis situations. High degree of responsibility associated with this profession implies high stress potential that largely depends on quality of leadership and decisions taken. Decision element is of crucial importance for successful crisis managing. In order to understand and improve decision-making in crisis situations, a necessity for rationalization of decision theory emerges. Researches focusing on the matter of decision-making have been conducted by scientists of many profiles, having establishment of basic approaches of modern decision theory for the result: normative approach is based on probability functions whereas the prescriptive approach provides guidelines for decision-making in practice. Finally, there is descriptive approach that harnesses heuristics to describe ways in which people actually decide. In real-life situations decision-making is laid by contextual and psychological boundaries inherent to all people. In that respect, observed patterns of different behaviours in people when it comes to decision-making under ambiguity, different from those in deciding under stress, play a major role. There are significant differences in practical values of particular models of decision-making. Therefore, this paper investigates various models of decision-making and their applicability in crisis situations in purpose of prevention and reducing stress levels in responsible persons. In the conclusion, the approach of bounded rationality based on heuristic strategies imposes itself as the most appropriate, although fallible, but often only possible choice. By adopting skills of situational awareness and critical thinking, supported by adequate stress trainings, simulations and preventive measures such as risk analysis, operation strategies and calculations of probability based on postulates of normative domain of decision-making theory, it is possible to mitigate negative influence of stress and enhance decision-making in crisis management.</p

Using Design of Experiments (DOE) for Decision Analysis

We take an engineering design approach to a problem of the artificial - corporate decision-analysis under uncertainty. We use Design of Experiments (DOE) to understand the behaviour of systems within which decisions are made and to estimate the consequences of alternative decisions. The experiments are a systematically constructed class of gedanken (thought) experiments comparable to “what if” studies, but organized to span the entire space of controllable and uncontrollable options. We therefore develop a debiasing protocol to forecast and elicit data. We consider the composite organization, their knowledge, data bases, formal and informal procedures as a measurement system. We use Gage theory from Measurement System Analysis (MSA) to analyze the quality of the data, the measurement system, and its results. We report on an in situ company experiment. Results support the statistical validity and managerial efficacy of our method. Method-evaluation criteria also indicate the validity of our method. Surprisingly, the experiments result in representations of near-decomposable systems. This suggests that executives scale corporate problems for analyses and decision-making. This work introduces DOE and MSA to the management sciences and shows how it can be effective to executive decision making

Risk Management – Managing Risks, not Calculating Them

The expected utility approach to decision making advocates a probability vision of the world and labels any deviation from it ‘irrational’. This paper reconsiders the rationality argument and argues that calculating risks is not a viable strategy in an uncertain world. Alternative strategies not only can save considerable cognitive and computational resources, but are more ‘rational’ with view to the restricted definition of rationality applied by expected utility theorists. The alternative decision making model of risk management is presented and explained.