Discussion Papers, Department of Business and Management Science, Norwegian School of Economics (NHH)
Weibull Wind Worth: Wait and Watch?
Abstract: This paper considers a decision problem in the context of
the worth of a wind mill project with profitability dependent on the
average wind speed. This is partly known and the issue is whether to go on
with the project now or, with an additional cost, put up a test mill and
observe, say for a year, and then decide. The problem is studied within a
Bayesian framework and given a general analytic solution for a specific
loss function of linear type, with the normal case as illustration.
Explicit formulas are then derived in the case when the wind speed
distribution is Weibull with known shape parameter, and the sensitivity
with respect to the specification of this parameter is explored. Based on
Norwegian wind speed data we then give a justification of the Weibull
model. This also provides some insight to parameter stability. Finally, a
complete numerical scheme for the Bayesian two-parameter Weibull model is
given, illustrated with an implementation of pre-posterior Weibull analysis
Keywords: Weibull distribution; decision analysis; pre-posterior Bayesian analysis; (follow links to similar papers)
JEL-Codes: C00; C10; C13; (follow links to similar papers)
19 pages, January 27, 2016
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Stein Fossen ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom