BA 410 -- Decision Analysis

Office: FSB 309 West E-mail: jes9@mail.duke.edu

Objective: Uncertainty and complexity make many decisions difficult. This elective provides an introduction to decision analysis -- the systematic evaluation of decision problems involving uncertainty. Decision analysis provides a framework for analyzing decision problems by breaking them down into more manageable parts and explicitly considering the possible alternatives, the available information, and the relevant preferences. In this course, we will discuss methods for structuring and modeling decision problems and apply these methods in a variety of managerial and personal decision-making contexts. While decision analysis does not provide a simple, all-purpose formula for "solving" decision problems, it does suggest a useful way of thinking about and approaching risky decisions.

Teaching Method: The course is taught with a mixture of lectures, discussion, cases, and a variety of exercises and other materials.

Grading: Grades are based on written assignments (75%) and class participation (25%); students may also boost their grade by doing a project of their own design. There are no exams.

Assignments: I plan to have 7 written assignments as indicated on the schedule. The assignments vary in nature, including cases, exercises, and decision-making situations. The assignments also vary in difficulty and the grades on the assignments will be weighted in accordance with their difficulty. (The weights are indicated on the schedule.) Please note the following rules and guidelines concerning the assignments:

-- Most of the assignments are to be done in teams of two though there may be parts where I ask each member to answer separately. Individual work is allowed but not encouraged: I will grade assignments the same whether they are done by an individual or a team of two.

-- In doing these assignments, I want each person or group to do their own analysis (build your own models, do your own calculations, etc.) and draw your own conclusions. You are not to "check" your results with others before turning in the assignment.

-- You may not read or use materials or solutions prepared for previous versions of this course.

-- Write-ups are due at the beginning of class on the date indicated in the schedule. We will discuss the assignments in class the day that they are due. Late assignments will not be accepted unless prior arrangements are made.

-- I strongly prefer that write-ups be typed. Hand-drawn figures are fine.

-- Write-ups should include justification for your conclusions, preferably in the form of analysis, modeling, logical arguments, etc., as appropriate. At the same time, the write-ups should be well structured, reasonably concise, and not rambling. The emphasis is on the quality of the write-ups.

Assignments, with all accompanying materials, will be handed out one or more class periods in advance of their due dates.

Participation: This category includes participation in discussions of assignments as well as other class discussions. It also includes the completion of other exercises and questionnaires as assigned. You will be evaluated on the quality of your contributions and insights. Quality comments generally reflect good preparation and possess one or more of the following properties:

-- They offer a different and unique, but relevant, perspective.

-- They contribute to moving the discussion and analysis forward.

-- They build on other comments.

-- They include some evidence, argumentation, or recognition of inherent tradeoffs. In other words, they demonstrate some reflective thinking.

There are also a number of ways to contribute to the course outside of the classroom. For example, you may follow up on classroom discussion with a posting to the class bulletin board. You may identify magazine or newspaper articles related to the class (bring them to my attention and I will copy and distribute them or post them to the bulletin board). I also value suggestions for improving the course, from editorial comments on course materials to suggestions for new topics and exercises. While your participation grade is subjective, it will not be random or arbitrary. Of course, more frequent quality contributions are better than less frequent quality contributions.

Project: You are encouraged to pursue topics that you find particularly interesting and may boost your grade by doing a project of your own design. There are a variety of options available for a project, including (but not limited to):

-- An analysis of a real decision problem (personal or managerial) that you are familiar with. Many students have taken this opportunity to examine their choice of (or search for) a job after Fuqua.

-- An analysis of an important decision problem (again, real) "in the public domain".

-- An experiment involving decision making and decision-analytic tools.

-- A review or "position piece" on an area related to decision analysis.

Projects can be done individually or in teams. The grade and weight assigned to the project will be based on the scope and quality of the project as well as the number of people involved. If you do a project, you are expected to schedule some time to present it to me during the class during exam week (December 11-15) and submit a write-up at that time. I also ask that you post an "executive summary" of your project to the class bulletin board.

Bulletin Board: I plan to make use of Fuqua's new computer mediated learning environment. In particular, I expect students to regularly check the bulletin board for announcements related to class. For example, I may post clarifications and comments on assignments to the bulletin board. I invite students to post comments following up on classroom discussion directly to the bulletin board. If you have questions about a particular assignment or about software, please send me e-mail. I will check my e-mail regularly and, if the same question is asked multiple times, I will post the question and answer to the bulletin board.

Text: The primary text for the course is Making Hard Decisions: An Introduction to Decision Analysis by Robert T. Clemen (PWS-Kent Publishing Company, Boston, 1990). The text is available at the Duke bookstore and several copies are on reserve at the Fuqua library. Assigned readings are noted in the course schedule given below. Supplementary reading materials and exercises will be handed out and assigned as appropriate. Chapters marked with an asterisk (*) are suggested readings that are not directly related to the main topics of the course.

Schedule:

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