Daily Assignment Oct 3 - Daily Assignment#9 Wednesday October 3 2012 Cost-effectiveness choice under uncertainty decision analysis Readings Cost

Daily Assignment Oct 3 - Daily Assignment#9 Wednesday...

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Daily Assignment #9 Wednesday, October 3, 2012 Cost-effectiveness & choice under uncertainty: decision analysis Readings “Cost Effectiveness,” Stokey & Zeckhauser, pp. 153-155 (Collab) “Decision Analysis,” Stokey & Zeckhauser, pp. 201-219, 237-243 (Collab) Key Terms Cost-effectiveness when the total expenditure for a given purpose is fixed and alternative projects are evaluated in whatever chosen unit to see which is most effective in achieving that purpose Cost-effectiveness analysis measurement of costs and benefits in different units with no need to search for a common metric; used when costs of alternative projects are identical and only the benefits need to be evaluated or vice versa Uncertainty fact that outcomes result from chance events that can’t be controlled Decision analysis used when decisions must be made sequentially with uncertainty being a crucial element, helps find the best route Decision tree diagram of the sequence of decisions and chance events Decision node square; indicates a decision needing to be made
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  • Fall '11
  • Kleiman
  • Cost-effectiveness analysis, Cost-utility analysis, chance node, Charlottesville High School

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