Nabil Al-Najjar, Northwestern University

Decision Analysis and Modeling

MBA and Executive MBA



This course has three anchors:

1-Fundamental concepts (conditional probability, independence, central limit theorem, risk aversion…)

2-Modeling tools, primarily simulations and decision tree analysis, using Palisade’s Decision Tools (@Risk and PrecisionTree)

3-Cases, in areas ranging from portfolio selection, options, moral hazard, real options, financial bubbles…


Case Studies I wrote in Decision Analysis and Modeling

The cases I wrote on this subject tend to be shorter and hypothetical to focus on specific learning points.

Formula for Success

  • Hypothetical case to teach Bayesian updating and base rate effects.
  • Themes: decision tree analysis in non-market (national security) context; separation of values and beliefs; incentive alignment in an organization.

Gaming Health Care Insurance
  • Hypothetical case to teach moral hazard in insurance markets.
  • Themes: Decision tree analysis, risk aversion, moral hazard.

Blind Shear Rams
  • Hypothetical case on the value of information.
  • Themes: Decision trees, value of information, risk aversion, corporate responsibility.

Distributive Justice
  • Hypothetical case on the costs and benefits of greater equity in society and organizations.
  • Themes: Risk aversion, incentives, ethics of redistribution, Rawlsian Justice.