Effect of disclosing the relation between effort and unit reliability on system reliability: An economic experiment

The purpose is to experimentally examine the effect of disclosing the risk probability of each unit in a production system on human behavior and the resulting system reliability. We used an economic experiment based on the theoretical model of Hausken (2002) to evaluate the effect of disclosing the relation between effort and unit reliability. We conducted first the non-disclosed-risk experiment and then the disclosed-risk experiment within subjects in both series and parallel systems. Our experimental results show that disclosing the relation between effort and unit reliability has two positive effects. First, subjects succeeded in improving the system reliability while cutting back on efforts to reduce the risk of their units when the risk probability was disclosed. In each system, the disclosed-risk condition achieves significantly higher system reliability on average than does the non-disclosed-risk condition, although the average level of effort is significantly lower under the disclosed-risk condition than under the non-disclosed-risk condition. Second, disclosing the risk probability simplified the subjects' decision-making process and reduced its cost because subjects made their decisions on the amount of effort to exert based only on the risk probability information without considering other factors, such as the number of accidents.