TRANSPORT INVESTMENT APPRAISAL IN THE PRESENCE OF UNCERTAINTY

Techniques employed for the appraisal of alternative transportation investment projects in the presence of uncertainty have been frequently and justifiably criticised. In this paper, the nature of such criticisms is analysed and from this analysis is developed a new method for handling uncertainty in investment appraisal. This takes full advantage of the insight the decision maker may reasonably be expected to have about the future without requiring heroic assumptions. The method is simple to put into practice and is based on an a priori ranking of the likelihood of future states of nature. Its application is appropriate in situations where results may reasonably be averaged over a series of investments and it can be shown to be more reliable in such circumstances than conventional techniques of the decision theoretic literature, such as maximum, maximax, etc. A simple numerical illustration is given.

• Corporate Authors:

  Pergamon Press, Incorporated

  Maxwell House, Fairview Park
  Elmsford, NY  United States  10523
• Authors:
  • PEARMAN, A D
• Publication Date: 1976-10

Media Info

• Pagination: p. 331-338
• Serial:
  • Transportation Research /UK/
  • Volume: 10
  • Issue Number: 5
  • Publisher: Pergamon Press, Incorporated

Subject/Index Terms

• TRT Terms: Appraisals; Decision making; Economic analysis; Forecasting; Investments; Technological forecasting; Transportation operations; Transportation planning; Uncertainty
• Old TRIS Terms: Transportation administration
• ITRD Terms: 255: Economics; 263: Economics of transport; 227: Investment; 1054: Network (traffic); 9078: Theory
• Subject Areas: Administration and Management; Economics; Finance; Highways; Railroads;

Filing Info

• Accession Number: 00149387
• Record Type: Publication
• Source Agency: British Railways
• Report/Paper Numbers: Analytic
• Files: ITRD, TRIS
• Created Date: Apr 27 1977 12:00AM