Utility Theory as a Method to Minimise the Risk in Deformation Analysis Decisions

authored by
Yin Zhang, Ingo Neumann

Deformation monitoring usually focuses on the detection of whether the monitored objects satisfy the given properties (e.g. being stable or not), and makes further decisions to minimise the risks, for example, the consequences and costs in case of collapse of artificial objects and/or natural hazards. With this intention, a methodology relying on hypothesis testing and utility theory is reviewed in this paper. The main idea of utility theory is to judge each possible outcome with a utility value. The presented methodology makes it possible to minimise the risk of an individual monitoring project by considering the costs and consequences of overall possible situations within the decision process. It is not the danger that the monitored object may collapse that can be reduced. The risk (based on the utility values multiplied by the danger) can be described more appropriately and therefore more valuable decisions can be made. Especially, the opportunity for the measurement process to minimise the risk is an important key issue. In this paper, application of the methodology to two of the classical cases in hypothesis testing will be discussed in detail: 1) both probability density functions (pdfs) of tested objects under null and alternative hypotheses are known; 2) only the pdf under the null hypothesis is known and the alternative hypothesis is treated as the pure negation of the null hypothesis. Afterwards, a practical example in deformation monitoring is introduced and analysed. Additionally, the way in which the magnitudes of utility values (consequences of a decision) influence the decision will be considered and discussed at the end.

Geodetic Institute
Journal of Applied Geodesy
No. of pages
Publication date
Publication status
Peer reviewed
ASJC Scopus subject areas
Modelling and Simulation, Engineering (miscellaneous), Earth and Planetary Sciences (miscellaneous)
Electronic version(s)
https://doi.org/10.1515/jag-2014-0012 (Access: Closed)
https://doi.org/10.15488/3167 (Access: Open)

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