Estimating event probabilities using zero failure data Breitung, Karl; Maes, Marc A.
In a rather well publicized June 2013 CBC broadcast, the safety of a specific series of Canadian onshore gas pipeline joints was declared “absolute” by one proponent, since, historically, no incidents or failures had ever been reported for that site. An opponent then argued that the face value of this risk could never be zero, but “very small”. The objective of the present paper is to review just how small, and at which confidence level, one can sensibly consider the actual incidence rate to be. A comparison of the most popular approaches and a comprehensive test for consistency, point to the superiority of the Bayesian estimator together with a non-central posterior probability interval.
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