Risk Modelling Approaches and Cost-Benefit Analysis with Applications

The aim of the research is concerned with establishing a new modelling approach that can address some unsolved problems raised by Altenbach (1995). New methods of modelling and measuring risk combined with cost-benefit analysis will be developed in order to determine the best possible solutions to some difficult decision making problems.

More precisely, this research will


  1. Redefine bivariate utility functions for the scenarios provided by Altenbach (1995) and extend these (in general) to risk (utility) functions for bivariate and trivariate utility functions.
  2. Develop some new expected utility theory for the multivariate utility functions.
  3. Extend the results in the work by Altenbach (1995) from 3 by 3 dimensions into general m by n dimensions.
  4. Present some new methods of modelling and measuring risk, and provide a preference basis and a unified approach to risk studies.
  5. Establish new methods of modelling and measuring risk combined with cost-benefit analysis in order to determine the best possible solutions to some difficult decision making problems.
  6. Propose new techniques based on Analytic Hierarchy Process (AHP) developed by Saaty (1980) for solving multi criteria decision making problems.

If all possible, we plan to apply the theoretic results obtained to some business decision making problems within the Federal Kurdistan Region in Iraq. The applicability of the developed techniques will both be project type dependent and data dependent within those specific projects.

These approaches will be applied to some cost-benefit modelling and analysis problems, which is usually conducted by comparing the costs and the benefits of each alternative option, and the option recommended will be the best in the sense that it offers to maximize benefits for minimum cost.

The research will establish techniques based on AHP for solving multi criteria decision making problems. This model involves building a hierarchy (ranking) structure that gives the priority for alternatives when multi criteria are considered for its inherent capability to handle both qualitative and quantitative criteria.

For more information please contact Peng Shi.