This is an ambitious proposal to advance the foundation of risk and decision analysis. The research focuses on decisions where incomplete or conflicting knowledge creates ambiguity about the probability of an event. In order to account for ambiguity aversion, the models to be investigated contain modifications to utilities rather than probabilities. Also, the proposed research is based on the concept of situation specific utility functions. The planned investigation will look at three important issues: the impact of probability ambiguity on choice, the incorporation of equity in social risk management, and the extension of generalized utility theory. The emphasis for each issue is on building and testing models. The general research strategy will be based on parallel theoretical development and empirical analysis. This coordination between theory and data should lead to improved models that can be applied in operational contexts.
