Introduction to Economic Decision Making for Engineers

03 4045

Time of lectures and exercises: Mondays, 14:30-17:30.

Detailed description (English)

Syllabus in Hebrew and English

Lecture note sections to be covered (links to Lecture Notes below)

  • Time-Value of Money, pp.3-15: time-value of money.
  • Time-Value of Money, pp.16-21: applications of time-money relations.
  • Time-Value of Money, pp.22-25:  uncertain profit rate, i.
  • Time-Value of Money, pp.26-31: uncertain yearly profit, A. 
  • Time-Value of Money, pp.32-33: uncertain i and A. 
  • Time-Value of Money, pp.34-43: present and future worth with uncertainty.
  • Time-Value of Money, pp.44-51: strategic uncertainty.
  • Time-Value of Money, pp.52-56: opportuneness.
  • Benefit-Cost Ratio,  pp.2-4: incommensurate benefits and costs.
  • Benefit-Cost Ratio,  pp.5-18: monetizing the benefit-cost ratio.
  • Benefit-Cost Ratio,  pp.19-32: BCR with incommensurate benefits and costs.
  • Price Changes, p.4: consumer price index.
  • Price Changes, pp.6-12: nominal and real prices.
  • Price Changes, pp.13-26: engineering decisions with inflation.
  • Price Changes, pp.26-37: foreign exchange rates.
  • Portfolio management, pp.2-3: mean-variance analysis.
  • Portfolio management, pp.4-9: info-gap extension of mean-variance analysis.
  • Portfolio management, pp.10-18: value at risk.
  • Forecasting, pp.2-19.
  • Special Topic 1: Behavioral response to feedback (ro02.pdf, section 17).
  • Special Topic 2: Strategic asset allocation (ro02.pdf, section 15).

Lecture Notes

Money-Time Relationships and Their Applications

The Benefit-Cost Ratio

Price Changes Inflation and Foreign Exchange

Portfolio Management

Forecasting

Behavioral Response to Feedback

Strategic Asset Allocation

Exercises

Homework exercises on Economic Decision Making for Engineers

Homework exercises on  Info-Gap Risks in Project Management

Exercises are in file “Homework exercises on Economic Decision Making for Engineers” unless indicated otherwise.

Homework #1: Problems 1-5.

Homework #2: Problems 9, 11.

Homework #3: Problem 12.

Homework #4: Problem 28.

Homework #5: Problem 13, a,b (and c).

Homework # 6: Problem 15.

Homework # 7: Problems 18 and 19.

Homework # 8: Problem 20.

Homework #9: Problem 21.

Homework # 10: Problems 35, 36.

Homework #11: Problem 23 (a), (d) and (e).

Homework #12: Problems 5, 6, 4a in Info-Gap Risks in Project Management.

Homework #13. Problem 86 (a)-(c) in Problem Set on Robustness and Opportuneness.