Potential benefit, potential loss and potential gain from competing opportunity and failure events
by M.T. Todinov
International Journal of Risk Assessment and Management (IJRAM), Vol. 10, No. 1/2, 2008

Abstract: A quantitative framework is presented dealing with competing opportunity and failure events in a finite time interval. The framework is based on the new fundamental concepts potential benefit, potential loss and potential gain, for which closed-form expressions regarding their distributions are derived and verified by a simulation. It is demonstrated that a decision strategy based on multiple event occurrences yields a very different gain compared with a decision strategy based on the next event occurrence. The results are illustrated by examples supporting decision making.

Online publication date: Sat, 01-Nov-2008

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