Modeling and analysis of decision making problem for mitigating natural disaster risks

In this paper, we show that a value function under risk is useful to model low probability and high consequence events like earthquakes for which the expected utility theory is inadequate. First, we assume alternatives to improve buildings, some scenarios of earthquakes, costs to improve buildings, probability of death and injury and cost of restoring the building's damage for each scenario. Then we show that the value function under risk is an appropriate approach to model and analyze a decision making process with low probability and high consequence events.