Decision Analysis

TMP152

Should I attend college? What major should I choose? Study or surf? Should I marry her? Should I accept the job or hold out for something better? Should I report what I saw? Save or spend? Stocks or bonds? Lease or buy? Bacon double-cheeseburger or salad?

From the life altering to the mundane, we make thousands of decisions a day, and must live with their consequences, forever. At the crossroads of philosophy, economics, statistics, psychology, sociology, technology and the life we lead, exists the decision.

This course explores how decisions are made, key factors affecting the decision making process, biases we must account for and the tools available for improving our decisions, as well as predicting those of others.

Decision Analysis incorporates theoretical, philosophical and empirical aspects of decision making in order to understand how it is that equally intelligent, rational people can make opposing choices. Students will learn how to apply statistical analysis, including data gathering and selection, and recognize its limitations. Theories will be tested through real world applications, challenging students to optimize individual and group decisions, as well as improve their ability to predict the choices of others.

Topics to be covered include normative vs descriptive decision theory, probability theory, temporal and relational factors, cognitive bias, game theory, expected utility, marginal utility, Bayesian probability and prospect theory.

Course Objectives:
Through a combination of lectures, role playing and case studies, students will develop an understanding of how decisions are made, the factors and biases that affect them, the tools that have been developed as a result, and the limitations that remain. The goal is to provide students with a solid foundation in the fundamentals of decision theory. By introducing real world applications that have a direct connection to the students, they will be inspired to apply what they have learned to their own decisions and further explore the topic well into the future.

Units: 

3
Fall
Spring