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IE54600 - Economic Decisions in Engineering

Spring 2015

Days/Time: TBA / TBA
Credit Hours: 3

Learning Objective:
This course deals with decision making and rationality, including decision analysis; decision making under uncertainty; various descriptive and prescriptive models from operations research, economics, psychology and business. Applications are drawn from engineering decision making, public policy, and personal decision making. Attention is also paid to designing aids to improve decision making.

Description:
Classical decision theory, deterministic decision rules, decision trees, influence diagrams, single/multiple stage analysis, sensitivity analysis; subjective probability, heuristics and biases, Bayesian methods, conjugate belief forms, inference, belief assessment methods, value of information, legal reasoning, risk analysis; utility theory, risk aversion, conflicting objectives, multi-attribute decision theory, analytic hierarchy process.

Topics Covered:
Classical decision theory, deterministic decision rules, decision trees, influence diagrams, single/multiple stage analysis, sensitivity analysis; subjective probability, heuristics and biases, Bayesian methods, conjugate belief forms, inference, belief assessment methods, value of information, legal reasoning, risk analysis; utility theory, risk aversion, conflicting objectives, multi-attribute decision theory, analytic hierarchy process.

Prerequisites:
Background in probability theory and familiar with general economics concepts.

Applied/Theory: 50/50

Web Address:
http://www.itap.purdue.edu/learning/tools/blackboard/

Web Content:
Syllabus, grades, lecture notes, homework assignments, solutions.

Homework:
Eight to ten assignments.

Exams:
Two exams and one final exam.

Textbooks:
*Tentative-check the Office of the Registrar Textbooks for the official list*
Required--Robert T. Clemen and Terence Reilly, Making Hard Decisions With Decision Tools Suite Updated Edition 2004 (2001 version is okay, as we don't use the software in the 2004 version). ISBN 0-495-01508-3 (You can also use the 2001 Edition.ISBN 0-534-51692-0 but it has errata which you will need to correct). Prof. Lehto does not use the software.

Computer Requirements:
ProEd minimum computer requirements.

ProEd Minimum Requirements: view

Tuition & Fees: view

Other Requirements:
None.

T. B. D.
Phone
None
Email
proed@purdue.edu
Office
Campus
Building
Address
West Lafayette, IN 47907