GBUS 735 Decision Analysis
Business decisions, both tactical and strategic, are frequently made difficult by the presence of uncertainty in the resulting consequences. This course presents a philosophy for framing, analyzing, and proactively managing decisions involving uncertainty, whether the uncertainty results from general conditions or the actions of competitors. The course will focus on making the uncertainty explicit so that it can be objectively analyzed. One way to manage risk proactively is to reduce the inherent uncertainty, for example, through better forecasting. Tools and techniques to support this objective will include risk profiles, expected value, simulation, sensitivity analysis, discounted cash flows, analytical probability distributions, data analysis, sampling theory, and regression. The course will also focus on proactively managing risk by recognizing and exploiting opportunities to reduce exposure to uncertainty, for example, through contingent contracts. Tools and techniques will include decision trees, value of information, value of control, downstream decisions, real options, and game theory.