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


pdf icon Risk Exposure and Risk Attitude of Homeowners in Fire Protection Investment Decisions. (4669 K)
Fuller, S. K.

NISTIR 89-4212; 82 p. December 1989.
Order number: PB90-141383

Keywords:

fire protection; risk analysis; sprinkler systems; decision making; risks

Abstract:

The report demonstrates that the Analytic Hierarchy Process (AHP) is a promising decision tool for evaluating fire protection systems for homeowners. It lays the ground for development of specialized computer software for applying the AHP to decisions of individual homeowners. Unlike conventional methods of economic analysis, the AHP integrates quantifiable and qualitative variables. 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, this 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.