Economic Decisions in Engineering

IE54600

Credit Hours:

3

Learning Objective:

Course Objective We will learn 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. Use of risk analysis software is optional (not required).

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:

https://mycourses.purdue.edu/

Web Content:

Syllabus, grades, lecture notes, homework assignments, solutions.

Homework:

Seven to eight homeworks.

Projects:

None.

Exams:

One midterm and one final exam

Textbooks:

Official textbook information is now listed in the Schedule of Classes. NOTE: Textbook information is subject to be changed at any time at the discretion of the faculty member. If you have questions or concerns please contact the academic department.
Tentative: Required: Clemen and Reilly, Making Hard Decisions with Decision Tools Suite. No specific edition required and the software that comes with the book will not be used.

Computer Requirements:

ProEd minimum computer requirements.

Other Requirements:

None.

ProEd Minimum Requirements:

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Tuition & Fees:

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