The technology investment strategy under uncertainty is the key subject. However, the expected utility maximization often employed as the decision process fails to consider the high risk with low probability cases. On...The technology investment strategy under uncertainty is the key subject. However, the expected utility maximization often employed as the decision process fails to consider the high risk with low probability cases. On the other hand, the existing min-max regret strategy tends to be dominated by the ＂worst assumption＂ regardless of its probability. This research proposes a new framework by formulating the regret by the Minkowski＇s generalized distance. The authors then apply the formulation to the IAM （integrated assessment model） MARIA. This study focuses on the uncertainties of CCS （carbon capture and storage） costs and the global warming damages. This formulation is then extended to the multi-stage decision frame, known as ATL （act-then-learn） method. The simulation results suggest that the substantial changes in CCS and nuclear deployment strategies depending on the future uncertainty scenarios. The results also suggest that the minimum regret strategy favors the capital accumulation in the early stage.展开更多
文摘The technology investment strategy under uncertainty is the key subject. However, the expected utility maximization often employed as the decision process fails to consider the high risk with low probability cases. On the other hand, the existing min-max regret strategy tends to be dominated by the ＂worst assumption＂ regardless of its probability. This research proposes a new framework by formulating the regret by the Minkowski＇s generalized distance. The authors then apply the formulation to the IAM （integrated assessment model） MARIA. This study focuses on the uncertainties of CCS （carbon capture and storage） costs and the global warming damages. This formulation is then extended to the multi-stage decision frame, known as ATL （act-then-learn） method. The simulation results suggest that the substantial changes in CCS and nuclear deployment strategies depending on the future uncertainty scenarios. The results also suggest that the minimum regret strategy favors the capital accumulation in the early stage.
