Rational Expectations as a Tool for Predicting Failure of Weighted K-Out-of-N Reliability Systems

28 Pages Posted: 18 Nov 2021

See all articles by Jorgen Vitting Andersen

Jorgen Vitting Andersen

CES, Université Paris 1 Panthéon-Sorbonne

Roy Cerqueti

University Sapienza Rome

Jessica Riccioni

University of Rome I - Sapienza University of Rome, Department of Earth Sciences and Forecasting Research Center, Prevention and Control of Geological Risks

Date Written: November 17, 2021

Abstract

Here we introduce the idea of using rational expectations, a core concept in economics and finance, as a tool to predict the optimal failure time for a wide class of weighted k-out-of-n reliability systems. We illustrate the concept by applying it to systems that have components with heterogeneous failure times. Depending on the heterogeneous distributions of component failure, we find different measures to be optimal for predicting the failure time of the total system. We give examples of how, as a given system deteriorates over time, one can issue different optimal predictions of system failure by choosing among a set of time-dependent measures.

Keywords: Rational expectations, weighted k-out-of-n reliability systems, failure prediction, statistical measures[comma separated]

JEL Classification: C00,C15,C53

Suggested Citation

Vitting Andersen, Jorgen and Cerqueti, Roy and Riccioni, Jessica, Rational Expectations as a Tool for Predicting Failure of Weighted K-Out-of-N Reliability Systems (November 17, 2021). Available at SSRN: https://ssrn.com/abstract=3965659 or http://dx.doi.org/10.2139/ssrn.3965659

Jorgen Vitting Andersen

CES, Université Paris 1 Panthéon-Sorbonne ( email )

Maison des Sciences Economiques
106-112 Boulevard de l'Hôpital 75647 Paris Cedex
Paris, 75647
France

Roy Cerqueti

University Sapienza Rome ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

Jessica Riccioni (Contact Author)

University of Rome I - Sapienza University of Rome, Department of Earth Sciences and Forecasting Research Center, Prevention and Control of Geological Risks ( email )

Rome
Italy

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