Decision Theory (7 ECTS)

Course Code: 
Elective Courses


Decision making under conditions of uncertainty. Calculating the financial outcomes for every combination of an act and a possible event. Decision criteria (criteria based exclusively on the possible financial outcomes). A priori decision making analysis. Hurwicz alpha index, the Bayes criterion, expected value of complete information. Graphical analysis of decision making problems. Point and possibility of indifference. The normal distribution in a priori decision making. The Bayes criterion and sensitivity analysis. Decision making and the theory of money utility. Constructing the money utility curve. The expected value as a decision criterion. Posterior analysis of decision making (utilizing the added information to optimize decisions, constructing the decision tree). Bayesian decision making and classic statistic deduction. Introduction to game theory (games with complete information, games with lacking information, games with two players of zero sum).

Recommended Reading

  • Ευάγγελος Μαγείρου, Παίγνια και Αποφάσεις, Εκδόσεις Κριτική, 2012.
  • Κ. Μηλολιδάκης, Θεωρία Παιγνίων, Εκδόσεις Σοφία, 2009.
  • J. Q. Smith, Decision Analysis: A Bayesian Approach, Chapman and Hall, 1988.
  • F. S. Hillier and G. J. Lieberman: Introduction to Operations Research, Mc GrawHill, 2005.