Introduction to Economic Decision Making for Engineers

03 4045

Time of lectures and exercises: Tuesdays, 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


Behavioral Response to Feedback

Strategic Asset Allocation


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: Problems 15, 16.

Homework # 7: Problems 17 and 18.

Homework # 8: Problem 20.

Homework #9: Problem 39 (f), (g) and (h).

Homework # 10: Problems 35, 40 (f)-(i).

Homework #11: Problem 51.

Homework #12: Problem 23 (a), (d) and (e).

Homework #13: Problems 5, 6, 4a in Info-Gap Risks in Project Management.

Homework #14. Problem 86 (a)-(c) in Problem Set on Robustness and Opportuneness.