university of san diego school of business administration spring 2007

8/14/2019 UNIVERSITY of SAN DIEGO School of Business Administration Spring 2007

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UNIVERSITY OF SAN DIEGO

School of Business Administration

Spring 2007

GSBA 509: MANAGERIAL ECONOMICS AND DECISION MAKING

Dr. Dirk Yandell

Office: OH 315 Phone: (619) 260-4835 [email protected]

http://www.sandiego.edu/~yandell

OFFICE HOURS:

Spring 2007:8:30 am - 10:30 am Tuesday, Thursday 4:00 pm -

5:30 pm Tuesday, Thursday or other times by

appointment (619) 260-4835

The hours listed above are times that I will always try to be available to see you. If I know in advance that Iwill be unable to keep these hours I will try to inform you. I will often be available at other times (M-W

mornings and early afternoons are likely), please feel free to call or stop by anytime. If convenient for you,send me e-mail or leave a voice-mail message and I will reply as soon as possible. I may be available on TTh

from 12:15 - 2:00 pm, but meetings and committee assignments often use this time slot.

COURSE DESCRIPTION:

This course examines models of decision making and applies the tools of applied microeconomics to solve

managerial decision problems. Topics include problem definition; generation of alternatives; optimizationtechniques; game theory; quantitative analysis including forecasting, demand estimation and optimal pricing;

qualitative analysis including issues of framing and perception and the social, political and ethical dimensionof decision making. Effective communication of recommendations and analysis in written and oral

presentations is required. (Prerequisites: Statistics for Managers and Managerial Accounting) (3 units)

GSBA 509 develops integrative decision-making skills in general business areas. Topics include problem

definition; generation of alternatives; quantitative analysis including forecasting, modeling, and othercontemporary techniques; qualitative analysis including political and ethical considerations; implementation

considerations; and planning for the verification of decision results.

The goal of this course is to apply decision tools and analytical techniques to evaluate decision problems faced

by managers. Principles of decision making are developed and applied to business problems. Elements ofdecision making will be examined, including decision framing, decision biases and judgement, fairness, and

anchoring. Tools developed in the course will be used to illustrate business decision making and will includerisk analysis, the value of information, demand estimation, optimal pricing, production, resource allocation, an

forecasting. This course is designed for students who have a basic knowledge of algebra and statistics. We wialso apply differential calculus in a limited way.

LEARNING OBJECTIVES:

This course is designed to provide MBA students with an understanding of how economics can be used by

business leaders to manage and compete more effectively. Tools of microeconomics will be used to evaluatethe internal structure, incentives, and decisions within a firm as well as the competitive forces external to the

firm.By the end of the course each student should be able to understand and apply appropriate economic


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concepts to assist managerial decision making. Students will learn and apply microeconomics and gametheory to solve business problems. Students will also explore the insights offered by microeconomic

theory into the choices made by individuals and teams. This course will equip students to betterunderstand the operation of markets and how market forces influence firm behavior and performance.

Specific Course Objectives:

By the end of the course, students should be able to:

Apply marginal analysis to decision problems and explain how basic economic reasoning can assist strategicdecision making.

Describe the application of supply and demand analysis to the working of local and global markets both inequilibrium and disequilibrium, including explanation of effects such as price controls, import quotas, subsidi

and taxation.Explain the concept of elasticity, calculate elasticities, and apply the results to determine how changes in

relevant variables affect a firms revenue or performance.Develop quantitative skills and analytical techniques, including optimization, demand estimation, cost

estimation, and forecasting, and apply these tools in business analysis.Analyze the boundaries of a firm, considering the horizontal boundaries (economies of scale and scope) and th

vertical boundaries (vertical integration and diversification).Discuss the ethical dimensions of economic decision making.

Evaluate an industrys market structure and explain how market conditions influence competitive strategy(entry, pricing, advertising, and other firm decisions).

Use basic game theoretic analysis to describe the behavior of firms in an oligopolistic industry.Explain the role of government to solve market failures.

Explain how basic economic reasoning is applied in other related disciplines, such as marketing, finance, andproduction.

Use the concepts of framing, bounded rationality, heuristics, and anchoring to explain observed deviations frorational decision making.

COURSE MATERIAL:

A. Text: Managerial Economics, (5th edition, John Wiley & Sons, 2006) by William F.Samuelson and Stephen G. Marks.

B. Lecture material and class handouts.C. Articles have been placed on reserve in the USD Library E-Reserve system. To view these article

go to http://www.sandiego.edu , find the Academics tab, click on Libraries, select CopleyLibrary (the large picture on the left), then click on E-Reserves in the Library Services area.

Next, click on Electronic Reserves and Reserves Pages. Finally, select by instructor for Yandell do a quick search for 509 to find this course. (To save time you may want to bookmark this link to

go to the page directly: http://copleylib.sandiego.edu/eres/coursepage.aspx?page=docs&cid=377 ).The page is password protected. The password is manager509 (all lower case and no spaces).

D. We will use Microsoft Excel for data analysis and decision modeling.

OPTIONAL BOOKS FOR SUPPLEMENTAL READING:

Bazerman, Max. Judgment in Managerial Decision Making5th ed. 2002. New York: John Wiley &

Sons.

Clemen, Robert, and Terence Reilly. Making Hard Decisions with DecisionTools. 2001. Duxbury.

Dixit, Avinash, and Barry Nalebuff. Thinking Strategically. 1991. W.W. Norton & Co.


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Gardner, Roy. Games for Business and Economics. 1995. John Wiley and Sons.Hammond, John, Ralph

Keeney and Howard Raiffa. Smart Choices. 1999. Harvard Business School Press. McAfee, R. Preston

Competitive Solutions. 2002. Princeton University Press.McCain, Roger. Game Theory. 2004.

Southwestern Publishing Company.Plous, Stott. The Psychology of Judgment and Decision Making.

1993. McGraw Hill.Russo, J. Edward, and Paul H. Schoemaker. Decision Traps. 1990. Fireside.Singh,

Hari.Framed! 2006. HRD Press, Inc.Williams, Steve W. Making Better Business Decisions. 2002. Sag

COURSE REQUIREMENTS:

The course grade will be based on two exams, 4 quizzes, and a project worth a total of 400 points.

A. There will be 4 quizzes during the semester, each worth 50 points. You may drop your lowest score,and there will be no makeups. A missed quiz will be counted as the one you dropped. Quizzes will be

announced in advance. Total possible points on quizzes: 150.

B. Practice problems will be assigned regularly but will not be collected. Problems should be completed

and ready for discussion at the beginning of the class period for which they are assigned.

C. Two exams will be worth 100 points each.

D. A project exercise will be assigned to allow you to model an uncertain decision problem from yourbusiness or personal experience. The project will be completed outside of class and will be worth 50

points. I will provide more information about this project in a separate handout.

E. Cooperation on practice problems is encouraged. Quizzes and exams, however, are to be done

individually. Ethical behavior is expected, according with USDs academic integrity policy.

TOTAL POSSIBLE POINTS: 400

EXAM, QUIZ AND ASSIGNMENT POLICY:

Unless otherwise announced, you should have assignments completed and ready to submit at thebeginning of the class on the date they are due. Exams will be primarily problem and short interpretation

questions. Subjective questions will be graded to reflect my analysis of your organization and clarity ofexpression as well as your mastery of content and concept.

Hand-held calculators may be used during examinations, and a one page handwritten sheet may beprepared for use on the quizzes and exams. The sheet may contain any information that you wish

(equations, explanations, prayers, etc...). The textbook may not be used during the exams. Finally,assume that if a graph or a formula would aid your explanation, it belongs in your answer.

MISCELLANEOUS COMMENTS:

Attendance is critical for success in this class. Although attendance is neither recorded nor explicitly use

to determine your final grade, you will find it much easier to keep up and master the material if you attenregularly. You are responsible for all material covered in class or assigned during a class even if you

were absent. Please contact me as soon as possible if you know you must miss a class.


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6) PROVIDING CONSTRUCTIVE FEEDBACK TO FACULTY MEMBERS regarding their performance. Students should be as

objective in their comments about instructors as they expect instructors to be in their evaluations of students.

Adapted from University of Chicago EXPECTATIONS FOR FACULTY

Faculty will treat their obligations for classes as they would treat any serious professional engagement.

That includes:

1) PREPARING THOROUGHLY for each class;

2) PUNCTUALITY in beginning class sessions, and except under unusual circumstances adherence to the established schedule for

classes and exams;

3) PROVIDING SUFFICIENT INFORMATION and materials to enable students to prepare adequately for class;

4) DISPLAYING APPROPRIATE COURTESY to all involved in the class sessions. Courteous behavior specifically entails

communicating in a manner that respects, and is sensitive to, the many individual differences in the USD community;

5) SUPPLYING TIMELY INFORMATION ABOUT STUDENT PERFORMANCE on projects, assignments, and examinations;

6) PROVIDING CONSTRUCTIVE FEEDBACK TO STUDENTS concerning their performance. Faculty should be as objective in

their feedback to students as they expect students to be in their evaluation of faculty.

BRIEF SEMESTER OUTLINE:

Chapter Topic(s)

Ch. 1 Introduction to Economic Decision Making Ch. 1 supplement: Prospect Theory (framing, judgement, and bias in

decision making) Ch. 2 Optimal Decisions Using Marginal Analysis Ch. 3 Demand Analysis and Optimal Pricing Ch. 4

Estimating Demand Ch. 5 Forecasting Ch. 6 Production Ch. 7 Cost Analysis

TEST #1 (actual chapter coverage may vary)

Ch. 8 Perfect Competition Ch. 9 Monopoly Ch.10 Oligopoly Ch.11 Game Theory and Competitive Strategy

Ch.12 Regulation, Public Goods, and Benefit-Cost Analysis Ch.13 Decision Making Under Uncertainty Ch.14 The Valu

of Information Ch.15 Asymmetric Information and Organizational Design

Ch.16 Bargaining and Negotiation (if time allows)

Ch.17 Auctions and Competitive Bidding (if time allows)

Ch.18 Linear Programming (if time allows)

Ch.19 Capital Budgeting (if time allows)

TEST #2 (actual chapter sequence for the second half of the course may vary)

February


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March

April

May

Tentative Semester Schedule (Due dates may change) GSBA 509 Spring 2007

Tuesday Thursday

30 First class meeting 1

6 8

1315 Quiz #1

20 22

271 Quiz #2

6 8

13 15

20 Midterm Exam22

27 29


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3 Spring Break 5 Spring Break

1012 Quiz #3

17 19

24 26

1 Quiz #43

8 10 Last class day

15 Dead Day - No Classes 17

22 Final Exam

university of san diego school of business administration spring 2007

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