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.
Citation
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