Decision making under risk in the case of nuclear power system development

Decision making under risk offers promise of a new and valuable procedure for social decisions. In this paper the theory of risk perference is adopted and it is shown that the interesting type of risk attitude is constant risk aversion. the theory is applied to a nuclear power system consisting of PHWRs and PWRs integrated with LMFBRs. Nine development alternatives for the system which evolves over a time period of 40 years are considered. the fast reactor integration is accomplished beginning in year 15 with a variable time delay so that for every alternative, six final states are possible. an econometric model of the system offers the cost price of annual energy generated by the system at the end of a given time interval for every possible state of any aiternative. Further, every state of an alternative is associated with a known probability and the concept of lottery is introduced. Finally, it is shown how to quantify the attitude toward risk and how to select among lotteries. In this way it was possible to obtaine the optimal development alternatives of the nuclear system in three cases: risk-perference, risk-indifference and risk-aversion. the solution in the last case is discussed in detail.