Decision making (continued)
problem definition and, 6–7
public decisions and, 16–18
regulatory problems and, 3–4
research and development
decisions and, 5
responsibilities for, 596–601
sensitivity analysis and, 12
six steps to, 6–12
using models and, 10–11
value maximization and, 13–15
Decision making under uncertainty
BP oil spill and, 518–519
decision trees and, 503–511
expected value and, 502–503
international business and,
509–511
management pitfalls and, 517–518
Microsoft risk management
example, 521–522
probability and, 501–502
probability distribution and,
502–503
recession and, 488
risk aversion and, 519–530
sequential decisions and,
511–519
uncertainty defined, 500–501
Decision trees, 503–511
Declining average cost, returns to
scale and, 247–249
Decreasing returns to scale, 199, 243
Deepwater Horizon,5, 518–519
Degrees of freedom, 142–143
Demand analysis
airline ticket pricing and, 77–78,
108–109
business behavior pricing in
practice, 97–98
complementary goods, 83
cross-price elasticity and, 89
demand curve and shifting
demand, 80–82
demand determinants, 78–83
demand function, 78–80
elasticity of demand, 83–88
income elasticity and, 88–89
inferior goods, 82
information goods and,
103–107maximizing revenue and, 94–95
multinational production and
pricing, 101–103
normal goods, 82
optimal pricing and, 91–107
price discrimination and,
99–103
price elasticity, revenue, and
marginal revenue, 91–94
price elasticity and prediction,
90–91
sensitivity analysis and, 50
substitute good, 82–83
Demand-based pricing, 101–102
Demand curves, 32–34, 80–82,
126–127, 285
Demand determinants, 78–83
Demand estimation and forecasting
data collection and, 129–133
forecasting, 159–166
movie demand, 128, 167–168
regression analysis and, 133–150
Demand function, 78–80
Department of Defense
procurements, 641
Dependent variables, 135
Deregulation, 466–467
Deterministic demand curves, 34
Deterministic models, 11
DHL, 601, 608
Direct elicitation, 481
Disclosure requirements, 611
Discount for risk, 520
Disney, 466
Dispute resolution, 634–636
Disruptive innovation, 255
Distributive bargain, 634
Dodd-Frank Act, 592, 612
Dominant firm, oligopoly and,
361–363
Dominant strategy, 404
Drug prices in Africa, 15–16
Dueling suppliers, oligopoly and,
363–366
Duopoly equilibrium, 365–366
DuPont, 361, 581–582, 600,
616–617
Durbin-Watson statistic, 150
Dutch auctions, 676–677
DVD standards, 411–413E
E-book pricing, 236–237
E-commerce, cost economies and,
251–252
EasyJet, 360
eBay, 104, 252, 323, 361, 691
Economic profit, 229
Economies of scale, 243, 322–323
Economies of scope, 252–253
Economy, stock market and, 431,
566–568
Edgeworth box, 636
Effective monopoly, 356
Effectively competitive market, 356
Efficiency, public goods and,
471–473
Ehrlich, Paul, 283
Elasticity of demand, 83–88
English auctions, 674–675
Enron, 615
Entry barriers, strategic, 421
Entry deterrence, 419–422
Enumeration, 11
Environmental costs and benefits, 482
Equation specification, 146
Equilibrium, 364–366
Equilibrium bidding strategies,
681–685
Equilibrium outcome, 64, 97
Equilibrium price, 285
Equilibrium strategies, 405–411
market-share competition,
405–408
Nash equilibrium and, 405–408
prisoner’s dilemma and, 408–410
Estimation error, 137
Euro Disney, 163–165
European Aeronautic Defense and
Space Company, 598
European Union Antitrust
Commission, 452
Exchange-rate risk, international
business and, 510–511
Exchange rates, sensitivity analysis
and, 51
Executive compensation, incentives
and, 613–615
Expected auction revenue, 687–688
Expected utility, 522–530
Expected value, 502–509754 IndexBMIndex.qxd 9/29/11 1:28 PM Page 754