Course Manual Quantitative Methods: Quantitative Business ...

Course Manual Quantitative Methods: Quantitative Business Analyses (QBA) 1. General Information Course: Quantitative Business Analysis Credits: 3 Coordinator: J.R. van den Brink, I.D. Lindner Tutorial lecturers: P.J. van Blokland, G.J. Franx, B. Heidergott, A.A.N. Ridder

2. Objective This course provides an introduction to the application of quantitative modeling and analyses to business administration problems.

Program Week 1

Lecturer Lindner

Subject Introduction to decision analysis and decision tree modeling; multistage decisions, sensitivity analysis. The value of perfect information. The value of imperfect information; risk attitude and expected utility theory.

Chapter Chapter T1 (page 3-30) and exercises of chapter E1: 1.1, 1.2, 1.3, 1.5, 1.8

2

Lindner

3

van den Brink

Introduction to Chapter T2 (page 57-69) noncooperative games and and exercises of chapter E2 their application in economics. Extensive form games; Perfect information; the Nash Equilibrium; the Subgame Perfect Nash Equilibrium.

4

van den Brink

Imperfect information; Normal form games; the Prisoners' Dilemma.

Chapter T2 (page 69-74) and exercises chapter E2

5

van den

Pure and mixed strategies;

Chapter T2 (page 75-80,

Chapter T1 (page 30-40) and exercises of chapter E1: 1.4, 1.6, 1.7, 1.9

6

Brink

the Cournot duopoly.

until section 6.2) and exercises of chapter E2

van den Brink

Auctions and Bargaining.

Chapter T2 (page 80-87) and exercises of chapter E2

Literature Obligatory literature: Chapter T1, T2, E1 and E2 from book “Quantitative Business Analysis” by C. van Montfort and J.R. van den Brink, Pearson Custom Publishing, Essex, United Kingdom, ISBN 978-1-84776-740-0 The Powerpoint presentations of the lectures are downloadable from VU Blackboard.

Description of the lectures Lectures October 31, November 7, 2011 The first part of this course concentrates on quantitative methods and tools for management decision analysis in situations where uncertainty and risk are of influence. Many real-life decision problems with uncertain outcomes may be modeled as "games against nature". We'll present decision trees and decision tree modeling as a practical tool to analyze these situations and to develop criteria and strategies for optimal decisions under the given circumstances. Subjects like utility functions, the value of (im)perfect information and sensitivity analyses are also considered. Lectures November 14, November 21, November 28, December 5, 2011 The second part of this course considers situations in which human or institutional opponents (other persons, companies or organizations) enter the game. Although "nature" will be indifferent to the strategy a player chooses, other human players generally are not. Many decision problems in economy may be modeled as either cooperative or noncooperative games. Famous examples like the Prisoners' Dilemma and important concepts like the Nash equilibrium and the Cournot Duopoly model will be presented during these lectures.

Working Groups The exercises for the working group sessions are in chapter E1 and E2 (i.e. page 95 up to and including 116) of the book “Quantitative Business Analyses” (by C. van Montfort and J.R. van den Brink). The schedule of the exercises, which will be dealt with during the working group sessions, will be announced on the Blackboard site.

Examination There will be an examination. The examination result has to be 5.5 or larger.