Assessing Probabilities of Unique Events in Decision Making

Abstract

This paper outlines a two-stage assessment procedure for deriving probabilities of unique events. The calculations are illustrated using possible events pertaining to the Lehman failure in 2008. The procedures utilize pairwise comparisons associated with the Analytic Hierarchy Process. Typical betting odds are used to motivate an ordering of qualitative judgments that are then converted into quantitative assessments and finally a probability distribution.