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ID:
089492
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Publication |
2009.
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Summary/Abstract |
In this paper, terrorism is analysed using the tools of modern portfolio theory. This approach permits the analysis of the returns that a terrorist group can expect from their activities as well as the risk they face. The analysis sheds new light on the nature of the terrorist group's (attack method) choice set and the efficiency properties of that set. If terrorist groups are, on average, more risk averse, the economist can expect the terrorist group to exhibit a bias towards bombing and armed attack. In addition, even the riskiest (from the terrorist group's point of view) combinations of attack methods have maximum expected returns of less than 70 injuries and fatalities per attack per year.
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2 |
ID:
092727
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Publication |
2009.
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Summary/Abstract |
Modern portfolio theory is applied to the problem of selecting which vehicle technologies and fuels to use in the next generation of vehicles. Selecting vehicles with the lowest lifetime cost is complicated by the fact that future prices are uncertain, just as selecting securities for an investment portfolio is complicated by the fact that future returns are uncertain. A quadratic program is developed based on modern portfolio theory, with the objective of minimizing the expected lifetime cost of the "vehicle portfolio". Constraints limit greenhouse gas emissions, as well as the variance of the cost. A case study is performed for light-duty passenger vehicles in the United States, drawing emissions and usage data from the US Environmental Protection Agency's MOVES and Department of Energy's GREET models, among other sources. Four vehicle technologies are considered: conventional gasoline, conventional diesel, grid-independent (non-plug-in) gasoline-electric hybrid, and flex fuel using E85. Results indicate that much of the uncertainty surrounding cost stems from fuel price fluctuations, and that fuel efficient vehicles can lower cost variance. Hybrids exhibit the lowest cost variances of the technologies considered, making them an arguably financially conservative choice.
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3 |
ID:
162978
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Summary/Abstract |
We take inspiration from the Modern Portfolio Theory introduced by Markowitz to propose a simplified strategy for the portfolio management of renewable energy sources based on Gaussian fluctuations with tunable correlations. By analyzing the impact of production fluctuations, we show how – depending on the sources' temporal correlation patterns – a careful geographical allocation of different types of renewal energy sources can reduce both the energy needs for balancing the power system and its uncertainty. The proposed strategy can be easily integrated in a decision support system for the planning of renewable energy sources. Therefore, providing policy/decision makers with an additional tool. We test our strategy on a set of case studies including a real-case based on literature data for solar and wind sources, and discuss how to extend the computation to non-Gaussian sources. The paper shows that in the Markowitz framework an efficient trade-off between production and fluctuations can be easily achieved, and that such framework also leads to important considerations on energy security. In perspective, analysis of time series together with such enriched frameworks would allow for the analysis of multiple realistic renewable generation scenarios helping decisions on the optimal size and spatial allocation of future energy storage facilities.
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