12 Decision Making Under Uncertainty
78 Pages Posted: 14 Feb 2006
Date Written: February 10, 2006
This is a course material from the book Investment Decision Making. For Firm and Project Valuation. The book is originally in Spanish and is untitled as Decisiones de inversión. Para la valoración financiera de proyectos y empresas.
Chapter 12 studies the problem of making decisions under risk and uncertainty. We present basic ideas on sensitivity analysis for one and several variables, game theory, decision trees, cardinal utility theory and Montecarlo simulation. We include some new subjects such as the Analytical Hierarchical Process, AHP and the Analytic Network Process, ANP, methods Developer by professor Thomas L. Saaty and a very short introduction to financial and real options.
Note: Downloadable document is in Spanish.
Keywords: Uncertainty, risk analysis, Montecarlo simulation, Analytical Hierarchy Process, sensitivity analysis, real options
JEL Classification: G31
Suggested Citation: Suggested Citation