Risk Exposure and Risk Attitude of Homeowners in Fire Protection Investment Decisions

摘要

The report demonstrates that the Analytic Hierarchy Process (AHP) is a promising decision tool for evaluating fire protection systems for homeowners. The study explores how to include in the decision-making process information on an individual's risk exposure and risk attitude, information which is generally difficult or impossible to quantify. By differentiating between risk exposure and risk attitude, the application goes beyond the AHP's conventional treatment of risk. The AHP is applied to the choice of purchasing smoke detectors, a sprinkler system, or a combination of the two. Two hypothetical cases are assumed, one in which the homeowner is risk-taking and has lower-than-average risk exposure, and one in which the homeowner is risk-averse and has higher-than-average risk exposure. Subjective probabilities of fire, death, injury, and property loss are merged with more easily quantifiable benefit and cost criteria. A method of pairwise comparisons provides the data to calculate priority vectors for the fire protection alternatives.